---

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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 
20549FORM 10-K



|           |                                                                                           
|---------- | ------------------------------------------------------------------------------------------
|(Mark One)
|x          | ANNUAL REPORT PURSUANT TO SECTION 13
  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|           |                                                                                           
|           | For the fiscal year ended December
  31, 2004                                             
|          
|OR        
|          
|o          | TRANSITION REPORT PURSUANT TO SECTION
  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |                                                                                           
|           | For the transition period from
  
  to                                                    

Commission file number 001-04668

|                                                        
|--------------------------------------------------------
|COASTAL CARIBBEAN OILS &
  MINERALS, LTD.               
|                                                        
|(Exact
  name of registrant as specified in its charter)



|                                                                 |  |                                         
|---------------------------------------------------------------- |  | ----------------------------------------
|BERMUDA                                                          |  | NONE                                    
|                                                                 |  |                                         
|State
  or other jurisdiction of
  incorporation or organization |  | (I.R.S.
  Employer
  Identification No.)

|                                                              |                   |                  |        
|------------------------------------------------------------- | ----------------- | ---------------- | -------
|                                                              |                   |                  |        
|                                                              | Clarendon House   |                  |        
|                                                              | Church Street     |                  |        
|                                                              | Hamilton, Bermuda |                  | HM
  11
|                                                              |                   |                 
|(Address of
  principal executive offices)                    |                   | (Zip
  Code)    
|                                                              |                   |                 
|Registrants telephone number,
  including area code          |                   | (850)
  421-2024
|                                                              |                   |                 
|                                                              |                   |                 
|Securities registered pursuant
  to Section 12(b) of the Act: |                   |                 

|                      |  |                                           
|--------------------- |  | ------------------------------------------
|Title
  of each class |  | Name
  of each exchange onwhich registered
|                      |  |                                           
|NONE                  |  |                                           

Securities registered pursuant to Section 12(g) of the Act:

| |                                          | 
| | ---------------------------------------- | 
| | Common
  stock, par value $.12 per share
| |                                          | 
| | (Title
  of Class)                       | 

---

---

Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

x  Yes       o No


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K §229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.    x

Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Act).

o Yes       x No


The
aggregate market value of the common stock held by non-affiliates of the
registrant was approximately $3,074,073 (U.S.) at April 1, 2005.

Indicate
the number of shares outstanding of each of the registrants classes of common
stock, as of the latest practicable date:

Common
stock, par value $.12 per share, 46,211,604 shares outstanding as of May 31,
2005.

DOCUMENTS
INCORPORATED BY REFERENCE

None

2

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TABLE OF
CONTENTS



|         |                                                                                                                  |      | 
|-------- | ---------------------------------------------------------------------------------------------------------------- | ---- | 
|         |                                                                                                                  | Page
|         |                                                                                                                  |     
|PART I  
|         |                                                                                                                  |      | 
|         | Risk Factors                                                                                                     | 4    | 
|         |                                                                                                                  |      | 
|Item 1.  | Business                                                                                                         | 10   | 
|         |                                                                                                                  |      | 
|Item 2.  | Properties                                                                                                       | 14   | 
|         |                                                                                                                  |      | 
|Item 3.  | Legal
  Proceedings                                                                                              | 18   | 
|         |                                                                                                                  |      | 
|Item 4.  | Submission of
  Matters to a Vote of Security Holders                                                            | 22   | 
|         |                                                                                                                  |      | 
|PART II 
|         |                                                                                                                  |      | 
|Item 5.  | Market for the
  Companys Common Stock, Related Stockholder Matters and Issuer Purchases of
  Equity Securities | 23   | 
|         |                                                                                                                  |      | 
|Item 6.  | Selected
  Consolidated Financial Information                                                                    | 26   | 
|         |                                                                                                                  |      | 
|Item 7.  | Managements
  Discussion and Analysis of Financial Condition and Results of Operations                          | 27   | 
|         |                                                                                                                  |      | 
|Item 7A. | Quantitative
  and Qualitative Disclosures About Market Risk                                                     | 31   | 
|         |                                                                                                                  |      | 
|Item 8.  | Financial
  Statements and Supplementary Data                                                                    | 32   | 
|         |                                                                                                                  |      | 
|Item 9.  | Changes in and
  Disagreements with Accountants on Accounting and Financial Disclosure                           | 54   | 
|         |                                                                                                                  |      | 
|Item 9A. | Controls and
  Procedures                                                                                        | 54   | 
|         |                                                                                                                  |      | 
|PART III
|        
|Item 10. | Directors and
  Executive Officers of the Company                                                                | 55   | 
|         |                                                                                                                  |      | 
|Item 11. | Executive
  Compensation                                                                                         | 57   | 
|         |                                                                                                                  |      | 
|Item 12. | Security
  Ownership of Certain Beneficial Owners and Management                                                 | 59   | 
|         |                                                                                                                  |      | 
|Item 13. | Certain
  Relationships and Related Transactions                                                                 | 61   | 
|         |                                                                                                                  |      | 
|Item 14. | Principal
  Accountant Fees and Services                                                                         | 63   | 
|         |                                                                                                                  |      | 
|PART IV 
|        
|Item 15. | Exhibits and
  Financial Statement Schedules                                                                     | 64   | 



---

All monetary figures set forth
are expressed in United States currency.


3

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PART I

RISK
FACTORS

An
investment in the Companys common stock involves a high degree of risk.  You should carefully consider the following
risk factors and other information in this Form 10-K and the documents
incorporated by reference in evaluating the Company.  If any of the following risks actually occur, the Companys
business, financial condition or results of operations could be materially
adversely affected.

After
years of litigation against the State of Florida (the State) in an effort to
secure drilling permits to use its Leases or to secure compensation for the
taking of those Leases, the Company, along with its majority owned subsidiary
Coastal Petroleum Company and royalty holders, has entered into an agreement
(the Agreement) with the State through which the Company will surrender the
Leases and the Company will receive compensation from the State.  Recent court decisions against the Company
and its subsidiary and the States continuing anti-drilling policies have made
it clear that Coastal Petroleum will not be allowed to drill on its Leases and,
despite that fact, the courts have not found that the Leases were taken and
have not awarded the Company compensation. 
The Company has also been unable to raise additional funds to continue
operations and has only survived this last year on loans from officers of the
Company.  Under the Agreement with the
State, the Company will receive and distribute the following:

| |                                                               |  |   |            | 
| | ------------------------------------------------------------- |  | - | ---------- | 
| | Agreement with the State                                      |  | $ | 12,500,000 | 
| |                                                               |  |   |            | 
| | To Lykes Mineral Corporation                                  |  |   | 1,390,000  | 
| | To Outside Royalty Holders                                    |  |   | 2,225,000  | 
| |                                                               |  |   |            | 
| |                                                               |  |   |            | 
| | To the Company and its Subsidiary                             |  |   | 8,885,000  | 
| |                                                               |  |   |            | 
| | To Settlement Consultant                                      |  |   | 465,000    | 
| | To Company Creditors (as of April 30, 2005)                   |  |   |            | 
| | CCO                                                           |  |   | 230,000    | 
| | CPC                                                           |  |   | 2,265,000  | 
| |                                                               |  |   |            | 
| |                                                               |  |   |            | 
| | Amount to
  Company and Subsidiary After payment to Creditors |  | $ | 5,925,000  | 

The other shareholders of Coastal Petroleum have
agreed to sell their shares back to Coastal Petroleum for a total of
$801,923.03 out of the remaining funds in the subsidiary.  Coastal will then own 100% of the
subsidiary.

4

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RISKS RELATED TO OUR BUSINESS AND THE LITIGATION

We
may be forced to wind up the Company or forced into insolvent liquidation.

The
Companys current liabilities exceed its current assets.  Certain creditors of the Company have
deferred payment of amounts owed to them. 
There is no assurance that those creditors will continue to permit the
Company to defer payments of amounts owed.

The
Company has limited funds to continue its operations.  In the event the Agreement is not finally consummated and unless
the Company is able to raise adequate additional funds to continue its
business, the Company may be required to wind up the Company or forced into
insolvent liquidation under the laws of Bermuda within the next several months.

We
have a history of losses and anticipate further losses, which could cause us to
discontinue our business.

Our
business has never had substantial revenues and has operated at a loss in each
year since our inception in 1953.  We
recorded a loss of $673,000 for the year ended December 31, 2004, a loss of
$1,008,000 for the year 2003 and a loss of $2,448,000 for the year 2002.  In the event the Agreement is not finally
consummated and if  we continue to
sustain losses and are unable to achieve profitability, we may not be able to
continue our business and may have to curtail, suspend or cease
operations.

Our
auditors have expressed the view that our negative working capital,
stockholders deficit and capital deficiencies raise substantial doubt about
our ability to continue as a going concern.

Our auditors have included an explanatory paragraph in their report for the
year ended December 31, 2004, indicating there is substantial doubt regarding
our ability to continue as a going concern. The financial statements included
elsewhere in this prospectus do not include any adjustments to asset values or
recorded liability amounts that might be required in the event we are unable to
continue as a going concern.  You
should also see Note 1 to our financial statements regarding the uncertainty as
to our ability to continue as a going concern.

Without
additional financing, we only have enough liquid assets on hand to continue to
operate the Company for part of the year 2005.

If
the Agreement is consummated, we believe that funds on hand will be sufficient
to permit us to continue to operate through 2005.  However, in the event the Agreement is not finally consummated,
we may have to suspend or cease operations unless and until we can secure
additional financing or privately sell additional shares of our stock.  We currently do not have any commitments for
additional financing.  We may be unable
to obtain additional financing in the future on acceptable terms or at all.

5

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We
believe that our funds on hand and certain loan committements from our
directors will be sufficient to permit us to continue to operate through June
of 2005.  After that time, we may have
to suspend or cease operations unless and until we can secure additional
financing.  In 2004 certain of our
directors, officers, legal counsel and administrative consultants agreed to
continue deferring the payment of their salaries and fees.  At December 31, 2004, the amount of salaries
and fees deferred totaled approximately $1,594,000.  We currently do not have any commitments for additional
financing.  We may be unable to obtain
additional financing in the future on acceptable terms or at all.

The
State of Florida has far greater resources than we do to prosecute the
litigation.

The
State of Florida utilizes lawyers from the Florida Attorney Generals Office,
the Department of Environmental Protection and at least two private law firms
to represent its interests in the litigation still pending.  In the event that the Agreement is not
finally consummated and our funds exhausted before the conclusion of the
litigation, we may be unable to conclude the litigation and might be required
to cease business.

If
the amount of money we recover from the State of Florida is inadequate to cover
our costs, we may be forced to cease operations.

The
State of Florida utilizes lawyers from the Florida Attorney Generals Office,
the Department of Environmental Protection and at least two private law firms
to represent its interests in the litigation still pending.  In the event that the agreement is not
finally consummated and our funds are exhausted before the conclusion of the
litigation, we may be unable to conclude the litigation and might be required
to cease business.

Coastal
Caribbean is currently a passive foreign investment company, or PFIC, for U. S.
Federal income tax purposes, which could result in negative tax consequences to
you.

If,
for any taxable year, our passive income or our assets that produce passive
income exceed levels provided by U.S. law, we would be a passive foreign
investment company, or PFIC, for U.S. federal income tax purposes.  For the years 1987 through 2004, Coastal Caribbeans
passive income and assets that produce passive income exceeded those levels and
for those years Coastal Caribbean constituted a PFIC.  Based upon Coastal Caribbeans current passive income, it is
likely that Coastal Caribbean will be classified as a PFIC in 2005.  If Coastal Caribbean is a PFIC for any
taxable year, then our U.S. shareholders potentially would be subject to
adverse U.S. tax consequences of holding and disposing of shares of our common
stock for that year and for future tax years. 
Any gain from the sale of, and certain distributions with respect to,
shares of our common stock, would cause a U.S. holder to become liable for U.S.
federal income tax under Code section 1291 (the interest charge regime).  The tax is computed by allocating the amount
of the gain on the sale or the amount of the distribution, as the case may be,
to each day in the U.S. shareholders holding period.  To the extent that the amount is allocated to a year, other than
the year of the

6

---

disposition or distribution, in which the corporation
was treated as a PFIC with respect to the U.S. holder, the income will be taxed
as ordinary income at the highest rate in effect for that year, plus an
interest charge.

Please
see a discussion of these consequences below in Item 5. Market for the
Companys Common Stock and Related Stockholder Matters.  We encourage you to consult with a personal
tax advisor for advice relating to the potential adverse tax consequences
related to an investment in our common shares.

Our
Bye-Laws contain provisions which may limit a shareholders efforts to
influence our policies and prevent or delay a change in control of our Company.

Bye-Law
1 provides that any matter to be voted on at any meeting of shareholders must
be approved not only by a simple majority of the shares voted at such meeting,
but also by a majority of the shareholders present in person or by proxy and
entitled to vote at the meeting.  This
provision may have the effect of making it more difficult to take corporate
action than customary one share one vote provisions, because it may not be
possible to obtain the necessary majority of both votes.  As a consequence, Bye-Law 1 may make it more
difficult that a takeover of the company will be consummated, which could
prevent the companys shareholders from receiving a premium for their
shares.  In addition, an owner of a
substantial number of shares of our common stock may be unable to influence our
policies and operations through the shareholder voting process (e.g., to elect
directors).

Our
Bye-Laws also require the approval of 75% of the voting shareholders and of the
voting shares for the consummation of any business combination (such as a
merger, amalgamation or acquisition proposal) involving our company.  This higher vote requirement may deter
business combination proposals which shareholders may consider favorable.

We
are unable to pay dividends.

We
have never declared or paid dividends on our common stock and do not anticipate
declaring or paying any dividends in the foreseeable future.  We plan to retain any future earnings to
reduce our deficit accumulated during the development stage of $40,124,000 at
December 31, 2004 and to finance our operations.

Any
dividends would be subject to a 30% withholding tax.

We
are a Bermuda corporation.  Bermuda
currently imposes no taxes on corporate income or capital gains realized
outside of Bermuda.  However, any
dividends we receive from Coastal Petroleum are subject to a 30% United States
withholding tax.

7

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RISKS RELATED TO OUR INDUSTRY

Compliance
with environmental and other governmental regulations could be costly.

Our
operations and right to obtain interests in and hold properties or to conduct
our business might be affected to an unpredictable extent by limitations
imposed by the laws and regulations which are now in effect or which might be
adopted by the jurisdictions in which we carry on our business.

Further
measures that have been or might be imposed include increased bond
requirements, conservation, proration, curtailment, cessation or other forms of
limiting or controlling production of hydrocarbons or minerals, as well as
price controls or rationing or other similar restrictions. In particular,
environmental control and energy conservation laws and regulations adopted by
federal, state and local authorities may have to be complied with.

We
face strong competition from larger oil and gas companies that may impair our
ability to carry on operations.

We
plan to operate in the highly competitive areas of oil and gas exploration,
development and production. We might not be able to compete with, or enter into
cooperative relationships with, our potential competitors, which include major
integrated oil companies, substantial independent energy companies, affiliates
of major interstate and intrastate pipelines and national and local gas
gatherers. If we were unable to establish and maintain competitiveness, our
business would be threatened.

Many
of our competitors possess greater financial, technical and other resources
than we do. Factors which affect our ability to successfully compete in the
marketplace include:

|  |                                                                         
|- | ------------------------------------------------------------------------
| | the financial resources of our competitors;                             
|  |                                                                         
| | the availability of alternate fuel sources; and                         
|  |                                                                         
| | the costs related to the extraction and
  transportation of oil and gas.

Cautionary
Statement About Forward-Looking Statements

In
this Form 10-K and the documents that we incorporate by reference, we make
statements that relate to our future plans, objectives, expectations and
intentions that involve risks and uncertainties.  We have based these statements on our current expectations and
projections about future events.  These
statements may be identified by the use of words such as expect,
anticipate, intend, plan, believe and estimate and similar
expressions.  Any statements that refer
to expectations, projections or other characterizations of future events or
circumstances are forward-looking statements.

8

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Forward-looking
statements necessarily involve risks and uncertainties.  Our actual results could differ materially
from those discussed in, or implied by, these forward-looking statements.  Factors that could contribute to such
differences include, but are not limited to, those discussed in the Risk
Factors section above and elsewhere in this Form 10-K.  The factors set forth in the Risk Factors
section and other cautionary statements made in this Form 10-K should be read
and understood as being applicable to all related forward-looking statements
wherever they appear in this Form 10-K.

All
subsequent written and oral forward-looking statements attributable to us are
expressly qualified in their entirety by the cautionary statements.  You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of their dates.  We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

9

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Item 1.    Business

(a)      General Development of Business.

Coastal
Caribbean Oils & Minerals, Ltd. 
(Company or Coastal Caribbean), a Bermuda corporation, has been engaged,
through its majority owned subsidiary, Coastal Petroleum Company (Coastal
Petroleum), in the exploration for oil and gas reserves.  At December 31, 2004, Coastal Caribbeans
principal asset was its 58.84% interest in its subsidiary Coastal
Petroleum.  Coastal Petroleums
principal assets are its nonproducing oil, gas and mineral leases and royalty
interests in the State of Florida. 
Coastal Petroleum is the lessee under State of Florida leases relating
to the exploration for and production of oil, gas and minerals on approximately
3,700,000 acres of submerged lands along the Gulf Coast and under certain
inland lakes and rivers.  The leases
provide for a working interest in approximately 1,250,000 acres and a royalty
interest in approximately 2,450,000 acres covered by the leases.

Coastal
Petroleum has made no commercial discoveries on its leaseholds and for more
than 15 years, the State has prevented Coastal from using its leases.  Since the late 1980s the State has used
laws, policies and permit denials to prevent and prohibit drilling and production
of oil and gas offshore Florida and to deny Coastal the use of its leases.  The Company has vigorously litigated to be
able to use its leases or to be compensated for the States taking of
them.  During 2004, the Company
continued its legal battle by asking the United States Supreme Court to hear
its case.  However, on June 14, 2004, the United States
Supreme Court denied the Writ of Certiorari and no further appeal of that claim
can be taken.  See Item 3. Legal
Proceedings.

After
the United States Supreme Court refused to hear the case and the Companys
legal options were limited, the State of Florida contacted the Company
regarding a possible buyback of the Companys leases.  With limited financial resources to continue the legal fight,
which was constrained by the recent court decisions, the Company continued
discussions with the State and ultimately, on June 1, 2005 entered an agreement
to surrender the leases back to the State of Florida in exchange for
compensation as set out below.  The
Agreement will allow the Company to end all of its current litigation and will
provide it the capital to move forward with drilling opportunities in other
locations.  The Agreement is contingent
upon approval of funding by the State, and the Company and other parties to the
Agreement providing releases and certain other documents to the State.

A
condition of the Agreement is that Coastal Petroleum and the royalty holders be
joined in one agreement.  Under the Agreement, the State will
repurchase Coastal Petroleums Leases and the royalties held by various
individuals and Coastal Caribbean, for a total of $12.5 million.  The parties will also sign mutual releases
and will dismiss pending actions against each other.  The money received from the State will be divided between the parties
in interest.  Under the Agreement
with the State, the Company will receive and distribute the following:

10

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|                                                              |  |   |            | 
|------------------------------------------------------------- |  | - | ---------- | 
|Agreement with the State                                      |  | $ | 12,500,000 | 
|                                                              |  |   |            | 
|To Lykes Mineral Corporation                                  |  |   | 1,390,000  | 
|To Outside Royalty Holders                                    |  |   | 2,225,000  | 
|                                                              |  |   |            | 
|                                                              |  |   |            | 
|To the Company and its Subsidiary                             |  |   | 8,885,000  | 
|                                                              |  |   |            | 
|To Settlement Consultant                                      |  |   | 465,000    | 
|To Company Creditors (as of April 30, 2005)                   |  |   |            | 
|CCO                                                           |  |   | 230,000    | 
|CPC                                                           |  |   | 2,265,000  | 
|                                                              |  |   |            | 
|                                                              |  |   |            | 
|Amount to
  Company and Subsidiary After payment to Creditors |  | $ | 5,925,000  | 

The other shareholders of Coastal Petroleum have
agreed to sell their shares back to Coastal Petroleum for a total of
$801,923.03 out of the remaining funds in the subsidiary.  This would leave Coastal Caribbean, which has 46,211,604 shares outstanding,
owning 100% of Coastal Petroleum Company. 
A copy of the Agreement is attached hereto as Exhibit 10.(h).

The
Florida Legislature addressed the funding of this Agreement by the State in the
recent legislative session which began in March of this year.  The Governor and Cabinet, sitting as the
Board of Trustees of the Internal Improvement Trust Fund, approved the
Agreement on June 1, 2005.  Upon
approval of the Legislative Budget Commission, the Company expects to receive
the funds after July 1 of this year. 
The date of closing will also be determined by the time it takes for the
parties to collect and exchange with the State the releases and other documents
set out in the Agreement.  The Company
will continue to develop plans for its continued operations.

In
recent years the Company has described the valuable prospects that, based upon
expert advice, management believes lie offshore Florida on the Companys
leases.  However, without a permit to
drill those prospects, their value can never be realized.  For years the Company litigated against the
State of Florida and provided it with every piece of information it requested,
in an effort to obtain a permit to drill. 
That process for a single location took years and cost the Company more
than $1 million.  The end result was
that the State denied the permit based upon a balancing process that gave
greater weight to its anti-offshore drilling policy and the environment than to
rights of the Company.  That process and
decision was affirmed on appeal, but the court decision left open the
possibility that the State would have to pay compensation for its denial of the
use of the leases.  The Company filed a
claim for compensation for the denial of the use of its lease, but the trial
court found that the State did not have to pay compensation, based, in part,
upon the nature of the Companys lease interest.  The State has filed motions seeking to extend the Courts
reasoning to the entirety of Coastals leases.

11

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In
light of the recent decisions, the high cost and futility of pursuing another
permit and the Companys financial condition, management believes that every
stone has been turned in efforts to drill on its leases and that the Agreement
is in the best interest of the Company and its shareholders.  Recent efforts to raise funds have not been
successful.  The Company has been
sustained on loans from officers and grace from some of its creditors.  The position of the State of Florida
regarding offshore drilling and the enormous cost and toll of litigation
required to overcome that position to be able to drill on the leases has
discouraged interest in the leases by other operating oil and gas
companies.  In the past, major oil companies
have encountered similar problems and have been unable to explore or develop
their leases offshore Florida.  As
described in this document, a potential option for the Company is dissolution
which would take place under Bermuda laws. 
Based upon advice regarding Bermuda insolvency law, such an insolvency
process would have a less favorable result for the Company and shareholders
than would the Agreement.

(b)          Financial
Information About Industry Segments.

Because
the Company has been engaged in only one industry, namely, oil, gas and mineral
exploration and development, this item is not applicable to the Company. See
Item 8 for general financial information concerning the Company.

(c)          Narrative
Description of the Business.

Coastal
Caribbean was organized in Bermuda on February 14, 1962.  The Company is the successor to Coastal
Caribbean Oils, Inc., a Panamanian corporation organized on January 31, 1953 to
be the holding company for Coastal Petroleum Company.

Coastal
Petroleum caused oil and gas exploration to take place on its leases prior to
the beginning of litigation in 1968 but has conducted more limited exploration
since that time.  Coastal Petroleum
believes all drilling and exploration obligations imposed by its leases have
been satisfied to date.  No commercial
oil or gas discoveries have been made on these properties; therefore, the
Company has no proved reserves of oil and gas and has had no production.  See Item 2. Properties.

| | (i)   | Principal Products.                                  
| | ----- | -----------------------------------------------------
| |       |                                                      
| |       | Not applicable.                                      
| |       |                                                      
| | (ii)  | Status of Product or Segment.                        
| |       |                                                      
| |       | Not applicable.                                      
| |       |                                                      
| | (iii) | Raw Materials.                                       
| |       |                                                      
| |       | Not applicable.                                      
| |       |                                                      
| | (iv)  | Patents, Licenses, Franchises
  and Concessions Held.
| |       | See Item 2. Properties.                            

12

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The
acreage covered by Coastal Petroleums leases is located for the most part
along offshore areas on the Gulf Coast of Florida and in submerged and
unsubmerged lands under certain bays, inlets, riverbeds and lakes, of which
Lake Okeechobee is the largest.  Coastal
Petroleum historically made an annual lease payment of $59,247 to the State of
Florida.  These lease payments were not
made during 2004, pending the outcome of the Agreement with the State of
Florida.

See Item 1(a) General Development
of Business above for a more complete discussion of the Agreement with the
State.

| |      |                                          
| | ---- | -----------------------------------------
| | (v)  | Seasonality of Business.                 
| |      |                                          
| |      | The Companys business is not
  seasonal.
| |      |                                          
| | (vi) | Working Capital Items.                   

The
Company has substantially no current assets and a working capital deficit of
approximately $2.4 million at December 31, 2004.  See Item 8. Financial Statements and Supplementary Data.

| |        |                                                                                                           
| | ------ | ----------------------------------------------------------------------------------------------------------
| | (vii)  | Customers.                                                                                                
| |        |                                                                                                           
| |        | Not applicable.                                                                                           
| |        |                                                                                                           
| | (viii) | Backlog.                                                                                                  
| |        |                                                                                                           
| |        | Not applicable.                                                                                           
| |        |                                                                                                           
| | (ix)   | Renegotiation of Profits or
  Termination of Contractsor Subcontracts at the Election of
  the Government.
| |        |                                                                                                           
| |        | Not applicable.                                                                                           
| |        |                                                                                                           
| | (x)    | Competitive Conditions in the
  Business.                                                                 

Competition
in the oil and gas industry is intense. 
The Company must compete with companies which have substantially greater
resources available to them.  In
addition, the industry as a whole must compete with other industries in
supplying the energy needs of commerce and the general public.  Furthermore, competitive conditions may be
substantially affected by energy legislation which may be adopted in the
future.

| |       |                          
| | ----- | -------------------------
| | (xi)  | Research and Development.
| |       |                          
| |       | Not applicable.          
| |       |                          
| | (xii) | Environmental Regulation.

The
operations of Coastal Caribbean and its right to obtain interests in and hold
properties or to do business may be affected to an unpredictable extent by
limitations imposed by the laws and regulations which are now in effect or
which may be adopted by the jurisdictions in which the Company carries on its business.  Further measures that

13

---

have been or might be imposed
include increased bond requirements, conservation, proration, curtailment,
cessation or other forms of limiting or controlling production of hydrocarbons
or minerals, as well as price controls or rationing or other similar
restrictions.  In particular,
environmental control and energy conservation laws and regulations adopted by
federal, state and local authorities may have to be complied with.

| |        |                                            
| | ------ | -------------------------------------------
| | (xiii) | Number of Persons Employed by
  Registrant.



The
Company currently has one employee.  The
Company relies heavily on consultants for legal, accounting, geological and
administrative services.  The Company
uses consultants because it believes it is more cost effective than employing a
larger full time staff.

| |     |                                                                                |                     
| | --- | ------------------------------------------------------------------------------ | --------------------
| | (d) | Financial Information About
  Foreign and Domestic Operationsand Export Sales.
| |     |                                                                                |                     
| |     | (1)                                                                            | Identifiable Assets.

All
of the Companys assets are located in the United States.  See Item 1(a) General Development of Business.

Since
the Company is a development stage company, the balance of the information
required under this paragraph is not applicable to the Company.  See Item 8.  Financial Statements and Supplementary Data.

| | (2) | Risks Attendant to Foreign
  Operations.                        
| | --- | ----------------------------------------------------------------
| |     |                                                                 
| |     | Not applicable.                                                 
| |     |                                                                 
| | (3) | Data which are not Indicative
  of Current or Future Operations.
| |     |                                                                 
| |     | Not applicable.                                                 

Item 2.     Properties

Properties

The
discussion herein relating to the Companys properties is qualified in its
entirety by the discussion in Item. 3 Legal Proceedings relating to the
Florida Litigation especially in repect to the Agreement with the State which,
if it is finally completed, will result in the Leases discussed below being
surrendered to the State of Florida in return for funds that will be used to
carry on operations elsewhere.  We have
not paid the 2004 annual lease payments, pending the final outcome of the
Agreement with the State of Florida.

Coastal
Petroleum, a Florida corporation, holds certain working interests in
nonproducing oil, gas and mineral leases covering approximately 1,250,000
acres, and a royalty interest in approximately 2,450,000 acres, in and offshore
the State of Florida.  No commercial oil
or gas discoveries have been made on the properties covered by these

14

---

leases and Coastal Petroleum has
no proved reserves of oil or gas and has had no significant production.

In
1941, Arnold Oil Explorations, Inc., renamed Coastal Petroleum Company in 1947,
entered into a contract with the Trustees of the Internal Improvement Trust
Fund of the State of Florida (Trustees), in whom title to publicly owned lands
in the State of Florida, including bottoms of salt and fresh waters, is
irrevocably vested, for the exploration of oil, gas and minerals on such
lands.  Pursuant to an option to lease
in this contract, the Trustees and Coastal Petroleum entered into three leases
between 1944 and 1946.  The acreage
covered by these leases is located for the most part along offshore areas on
the Gulf Coast of Florida and in submerged lands under certain bays, inlets,
riverbeds and lakes, of which Lake Okeechobee is the largest.

In
1968, Coastal Petroleum sued the Secretary of the Army of the United States in
a dispute regarding certain mineral rights. 
In 1969, as part of that litigation, the Trustees claimed that the
leases were invalid and had been forfeited. 
Coastal Petroleum and the Trustees settled their disagreement in 1976.

Under
the terms of the 1976 settlement agreement, the two leases (224-A and 224-B)
bordering the Gulf Coast were divided into three areas, each running the entire
length of the coastline from Apalachicola Bay to the Naples area:  (1) The inner area, including rivers, bays,
and harbors, extends seaward from the Florida shoreline a distance of 4.36
statute miles (5,280 feet per statute mile) into the Gulf, covers approximately
2.25 million acres, and is  subject to a
royalty interest payable to Coastal Petroleum. 
This interest is a 61⁄4% royalty on the wellhead value of all oil and gas,
25 cents per long ton on sulfur, receivable in cash or in kind at Coastal
Petroleums option, and a 5% royalty on production or the market value of other
minerals.  (2) The middle area, three
statute miles wide and covering more than 800,000 acres, was released by
Coastal Petroleum to the Trustees, and Coastal Petroleum has no further
interest in the area.  (3) Coastal
Petroleum presently owns a 100% working interest in the outside area, which
extends seaward an additional three statute miles and borders federal offshore
acreage.  This area, exceeding 800,000
acres, remains subject to royalties payable to the State of Florida of 121⁄2% on
oil and gas, $.50 per long ton of sulfur and 10% on other minerals.  The Florida legislature has enacted statutes
designed to protect the Big Bend Seagrass Aquatic Preserve, an area covering
approximately one quarter of Coastal Petroleums working interest area.  However, the legislation and legislative
history recognize and preserve Coastal Petroleums prior rights as granted by
the leases.

Coastal
Petroleum retains a 100% working interest in 450,000-acre Lake Okeechobee which
is a part of Lease 248 and which is also subject to royalties payable to the
State of Florida of 121⁄2% on oil and gas, $.50 per long ton of sulfur and 10% on
other minerals.  Pursuant to its
settlement with the State of Florida in 1976, Coastal Petroleum agreed not to
conduct exploration, drilling or mining operations on Lake Okeechobee without
the prior approval of the State.  As to
the balance of this lease, covering approximately 200,000 acres, Coastal
Petroleum retains royalty interests of 61⁄4% on oil, gas and sulfur and 5% on
other minerals.

15

---

Under
the 1976 settlement agreement with the Trustees, the three leases have a term
of 40 years beginning from January 6, 1976 and require the payment of an annual
rental of $59,247, if oil, gas or minerals are being produced in economically
sustainable quantities at January 6, 2016, these operations will be allowed to
continue until they become uneconomic. 
Further, the settlement agreement provides that the drilling requirements
shall be governed by Chapter 20680, Laws of Florida, Acts of 1941, and that all
other drilling requirements are waived. 
Under the 1941 Act, a lessee is required to drill at least one test well
on lands leased in each five-year period under the term of the lease.  Coastal Petroleum believes it is current in
fulfilling its drilling requirements. 
The State of Florida has refused Coastal Petroleum the right to drill on
Lease 248 since August 10, 1986.

The
following charts reflect the acreage and annual rental obligations resulting
from the 1976 settlement agreement with the Trustees and the approximate
acreage under lease at December 31, 2004:



|                |  |  |           |          |  |           |          |   |         |  | 
|--------------- |  |  | --------- | -------- |  | --------- | -------- | - | ------- |  | 
|                |  |  |           | Current  |  |           | Current  |   | Current | 
|                |  |  |           | Working  |  |           | Royalty  |   | Annual  | 
|Lease           |  |  |           | Interest |  |           | Interest |   | Rental  | 
|                |  |  |           |          |  |           |          |   |         |  | 
|224-A and 224-B |  |  | 800,000   |          |  | 2,250,000 |          | $ | 39,261  | 
|248             |  |  | 450,000   |          |  | 200,000   |          |   | 19,986  | 
|                |  |  |           |          |  |           |          |   |         | 
|                |  |  | 1,250,000 |          |  | 2,450,000 |          | $ | 59,247  | 
|                |  |  |           |          |  |           |          |   |         | 

Acreage under lease at December 31, 2004

|                 |  |  |                 |  |           |                |  |             |           |           |  |    
|---------------- |  |  | --------------- |  | --------- | -------------- |  | ----------- | --------- | --------- |  | ---
|                 |  |  | Gross Acres (*) |  |           | Net Acres (**)
|                 |  |  |                 |  |           |               
|                 |  |  | Undeveloped     |  | Developed |                |  | Undeveloped |           | Developed
|                 |  |  |                 |  |           |                |  |             |           |           |  |    
|Working interest |  |  | 1,250,000       |  |           | -0-            |  |             | 1,250,000 |           |  | -0-
|Royalty interest |  |  | 2,450,000       |  |           | -0-            |  |             | 153,125   |           |  | -0-
|                 |  |  |                 |  |           |                |  |             |           |           |  |    
|Total            |  |  | 3,700,000       |  |           | -0-            |  |             | 1,403,125 |           |  | -0-
|                 |  |  |                 |  |           |                |  |             |           |           |  |    



|*  | A gross acre is an acre in which a working interest
  is owned.                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | A net acre is deemed to exist
  when the sum of fractional ownership working interests in gross acres equals
  one.  The number of net acres is the
  sum of the fractional working interests owned in gross acres expressed as
  whole numbers and fractions thereof.

Disclosure Concerning Oil and Gas
Operations.

Since
the properties in which the Company has interests are undeveloped and
nonproducing, items 2 through 4 of Securities Exchange Act Industry Guide 2 are
not applicable.

|    |                     
|--- | --------------------
|(5) | Undeveloped Acreage.

The Companys undeveloped
acreage as of December 31, 2004 was as follows:



|                 |  |  |             |  |  |           | 
|---------------- |  |  | ----------- |  |  | --------- | 
|                 |  |  | Gross Acres |  |  | Net Acres | 
|                 |  |  |             |  |  |           | 
|Working Interest |  |  | 1,250,000   |  |  | 1,250,000 | 
|Royalty Interest |  |  | 2,450,000   |  |  | 153,125   | 
|                 |  |  |             |  |  |           | 
|Total            |  |  | 3,700,000   |  |  | 1,403,125 | 
|                 |  |  |             |  |  |           | 

16

---

|    |                      
|--- | ---------------------
|(6) | Drilling Activity.   
|    |                      
|    | None                 
|    |                      
|(7) | Present Activities.  
|    |                      
|    | None                 
|    |                      
|(8) | Delivery Commitments.
|    |                      
|    | None                 

Royalties and Other
Interests

In
addition to royalties payable to the State of Florida as set forth above,
Coastal Petroleums leases are subject to several royalties and other
interests.  The leases are presently
subject to overriding royalties aggregating 1/16 as to oil, gas and sulphur and
13/600ths as to minerals other than oil, gas and sulphur.

We
also have granted to certain officers, directors, counsel and consultants of
Coastal Petroleum and Coastal Caribbean the right to receive a percentage of
the net recoveries from the Florida Litigation.  The costs and fees for the years involved in the Florida
litigation exceed the amount of the funds Coastal Petroleum will receive under
the Agreement with the State. 
Therefore, if the Agreement is finally consummated, there is no net
recovery and no contingency fees due under the contingent interests granted to
officers, directors and counsel.  See
Item 3. Legal Proceedings and Item 13. Certain Relationships and Related
Transactions.

Mineral Rights

Coastal
Petroleums Leases 224-A, 224-B and 248 were determined by a Florida State
court in 1960 to cover not only oil, gas and sulphur, but also all other
minerals. Subsequent litigation has held that these other minerals do not
embrace certain deposits of shell accumulated on water bottoms which had not
yet become mineral, and that Lake Hancock is not within the area covered by
Lease 224-B.  Under the 1976 settlement
agreement with the State of Florida, Coastal Petroleum retains a 5% royalty
with respect to mineral production. 
However, it cannot conduct mining operations in 450,000-acre Lake
Okeechobee without the prior approval of the State of Florida.Although
Coastal Petroleum had conducted limited mineral exploration activities on its
leases, the courts during the 1980s limited its rights to mine minerals.
Coastal Petroleum has no independent knowledge of commercial deposits on
its leases.  If the Agreement with the
State becomes final, as described in Item 1(a) General Development of Business above,
these rights will be surrendered to the State of Florida in exchange for
compensation.

17

---

Item 3.          Legal Proceedings

Agreement with the State of Florida

For
years Coastal Petroleum has litigated against the State in an effort to secure
drilling permits and drill for oil off the coast of Florida.  The State has denied Coastal Petroleum
permission to drill on its Leases, a decision that has been upheld by a Florida
court.  Florida courts have also denied
Coastal Petroleum compensation for a taking of the Leases.  Since that time, efforts to secure funding
to continue operations have not been successful.  Furthermore, the longstanding State policy against any drilling
for oil or gas offshore of Florida remains in place with no indication that it
will change.  In fact, the policy
reflects the Florida Statutes which ban drilling for oil and gas in Florida
state waters.  Given the policy and
court decisions, any additional attempt by Coastal Petroleum to secure a permit
to drill its Leases is seen by Management as futile.

After the United
States Supreme Court refused to hear Coastal Petroleums taking case in 2004
and the Companys legal options were limited, the State of Florida contacted
Coastal Petroleum regarding a possible buyback of its leases.  With limited financial resources to continue
a legal fight which was further frustrated with recent court decisions, Coastal
Petroleum continued discussions with the State and ultimately, on June 1, 2005
was joined by Coastal Caribbean in accepting an offer by the State of
Florida to repurchase Coastal Petroleums Florida Leases.  The Company will receive $5.9 million
after payment to all creditors.    The Agreement will
allow the Company to end all of its litigation, including the States action
for costs against the Company arising from the inverse condemnation trial on
Lease 224-A, and will provide it the capital to move forward with drilling
opportunities in other locations.  The
Agreement is conditioned upon approval of funding by the State, and the Company
and other parties to the Agreement providing certain documents to the State as
outlined above in Item 1(a) General Development of Business.  Since the finalization of the Agreement has
not yet occurred and is contingent, the following descriptions remain
applicable until such finalization does occur.

Florida Litigation

Coastal
Petroleum has been involved in various lawsuits for many years.  Coastal Petroleums recent litigation has
involved one basic claim: whether the States offshore drilling policy and its
denial of a permit constitute a taking of Coastal Petroleums property. In
addition, Coastal Caribbean is a party to another action in which Coastal
Caribbean claims that certain of its royalty interests have been confiscated by
the State.

Drilling
Permit Litigation -Lease
Taking Case (Lease 224-A)

Since
1992, Coastal Petroleum
has sought a permit from the Florida Department of Environmental Protection
(the DEP) to drill an exploratory oil and gas well off Apalachicola,
Florida.  The permit has been repeatedly
denied leaving Coastal without a permit and the alternative of seeking
compensation for the taking of its lease.

18

---

During
the past year, Coastal Petroleum continued its legal battle in an attempt to
obtain compensation for the taking of its lease.  Previously, the trial court ruled that the States denial
of a permit to drill on Lease 224-A did not constitute an unlawful taking of
Coastal Petroleums property and that decision was affirmed by the Florida
First District Court of Appeal.  On April 8, 2004, Coastal Petroleum filed a
Petition for Writ of Certiorari with the United States Supreme Court asking the
Court to accept jurisdiction to consider the action taken by the trial court as
affirmed by the appellate court.  The
States Answer Brief and Coastals subsequent Reply Brief were filed by May 21,
2004.  On June 14, 2004, the United
States Supreme Court denied the Writ of Certiorari, leaving no further avenue
of appeal for this claim.

Meanwhile,
after the trial in 2002, the State filed a motion for an order by the trial
court by which the State seeks to recover $178,315 from Coastal Petroleum,
including expert witness fees, deposition costs and copying costs.  Coastal Petroleum has filed objections and
responses to the States motion, objecting to the costs and requesting an
evidentiary hearing.  On April 9, 2003,
the State agreed not to pursue its motion until after conclusion of the appeal
in this case and the motion has not been set for hearing.  Under the Agreement with the State, this
claim would be dismissed.

Ancillary Matters to Lease Taking
Case (Lease 224-A)

In
2001, certain holders of royalties, which aggregate approximately 4%, were
allowed to intervene on a limited basis in the Lease 224-A takings lawsuit.  Counsel for the appealing royalty holders advised Coastal Petroleum that
the royalty holders position is that their interest is worth substantially
more than 4% of whatever judgment may be awarded to Coastal Petroleum in the
litigation and that they intend to make a claim against any recovery Coastal
Petroleum may obtain in the litigation. 
Coastal Petroleum informed the Circuit Court and counsel for the royalty
holders that Coastal Petroleum was not making any claim in the litigation on
behalf of any interest the royalty holders may have.

Other Permit Applications

In
order to more fully permit the Apalachicola Reef Play, which includes the St.
George Island prospect, on October 29, 1998, Coastal Petroleum filed four
additional permit applications (1310-1313). 
The DEP requested additional data for these applications and as of June 1, 2005, Coastal Petroleum had not yet
submitted the requested data.  Although
these applications are still pending, Coastal Petroleum does not believe the
DEP will ever grant these permits.  Upon
the finalization of the Agreement with the State, these permits will be
withdrawn.

Coastal Caribbean Royalty
Litigation

The offshore areas covered by Coastal Petroleums
original leases (prior to the 1976 settlement agreement) are subject to certain
other royalty interests held by third parties, including Coastal
Caribbean.  In 1994, several of those
third parties, including Coastal Caribbean, which has approximately a 12% interest
in any recovery for the royalty, instituted a separate lawsuit against the
State of Florida.  In that lawsuit the
royalty holders claim their interests have been confiscated as a result of the
States

19

---

actions
discussed above and that they are entitled to compensation for that taking.  The royalty holders were not parties to the
1976 settlement agreement, and the royalty holders contend that the terms of
the settlement agreement do not protect the State from taking claims by those
royalty holders.  The case is still
pending in the 2nd Judicial Circuit in Tallahassee, Leon County,
Florida.  Discovery is proceeding and the State has filed a motion for summary
judgment.  A hearing on the motion
originally set for April 26, 2005 was cancelled in light of the pending
Agreement with the State described above. 
Any recovery made in the royalty holders lawsuit would be shared among
the various plaintiffs in that lawsuit, including Coastal Caribbean, but not
Coastal Petroleum.  Upon the
finalization of the Agreement with the State, this lawsuit will be dismissed by
Coastal Caribbean and the other royalty holders.

Lease Taking
Case (Lease 224-B)

In
Coastal Petroleums case in the Leon County Circuit Court, Florida seeking
compensation for the State of Floridas alleged taking of its property rights
to explore for oil and gas within its State Lease 224-B remains pending.  During the past year the State filed a
motion for summary judgment in this case seeking to end this case.  Coastal filed a response and the motion was
argued in the Second Judicial Circuit Court for Leon County, Florida on
November 10, 2004.  The judge did not
rule at the hearing, but took the matter under advisement for further
consideration.  To date there has been
no ruling in the case.  The judge may grant summary judgment, deny it
or partially grant it.  A grant of
summary judgment on part or all of the case would be a decision by the court on
those issues leaving Coastal the option of an appeal to try to have the summary
judgment reversed and those matters considered after the trial court receives
evidence on those issues.  If summary
judgment is denied, the case will proceed through discovery and on to trial.  Upon the finalization of the Agreement with
the State, this lawsuit will be dismissed by the Company.

Counsel

The
Tampa, Florida law firm of Gaylord Merlin Ludovici Diaz & Bain was Coastal
Petroleums principal trial counsel in Coastal Petroleums inverse condemnation
claim against the State of Florida in Florida Circuit Court (Lease 224-A). Mr. Cary Gaylord was the lead attorney for
Gaylord Merlin. Mr. Gaylord has extensive experience in eminent domain and
property rights matters.  He is a 1969
graduate of the United States Military Academy and a 1974 graduate of the
University of Florida Law School.

In addition, Mr.
Robert J. Angerer of the law firm of Angerer & Angerer of Tallahassee,
Florida assisted Gaylord Merlin in the litigation.  Mr. Angerer, age 58, is a 1969 graduate of the University of
Michigan and received his law degree with high honors from Florida State
University in 1974.  Mr. Angerer was
elected a member of the Board of Directors of Coastal Caribbean and of Coastal
Petroleum on January 30, 2003 and a Vice President of Coastal Caribbean and
Coastal Petroleum on February 28, 2003. 
Angerer & Angerer is the principal counsel in Coastal Petroleums
inverse condemnation claim regarding Lease 224-B.

20

---

Contingency Fees

In 1990,
Coastal Petroleum considered that the following firms or individuals were
important to the success of the litigation against the State of Florida and
agreed to pay them an aggregate of 7.9% in contingent fees based on any net
recovery from execution on or satisfaction of judgment or from settlement of
the Florida litigation:

| |                       |  |                                                        |  |                          |      |  |  | 
| | --------------------- |  | ------------------------------------------------------ |  | ------------------------ | ---- |  |  | 
| | Holder                |  | Relationship to
  Coastal Petroleum
  at Date of Grant |  | Net
  RecoveryPercentage |     
| |                       |  |                                                        |  |                          |     
| | Reasoner, Davis & Fox |  | Special Counsel                                        |  |                          | 2.00 |  | 
| | Robert J. Angerer     |  | Litigation Counsel                                     |  |                          | 1.50 |  | 
| | Benjamin W. Heath     |  | Chairman of the Board                                  |  |                          | 1.25 |  | 
| | Phillip W. Ware       |  | President                                              |  |                          | 1.25 |  | 
| | Murtha Cullina LLP    |  | Securities Counsel to Coastal Caribbean                |  |                          | 1.00 |  | 
| | James R. Joyce        |  | Assistant Treasurer                                    |  |                          | .30  |  | 
| | Arthur B. ODonnell   |  | Vice President/Treasurer                               |  |                          | .30  |  | 
| | James J. Gaughran     |  | Secretary                                              |  |                          | .30  |  | 
| |                       |  |                                                        |  |                          |      |  | 
| | Total                 |  |                                                        |  |                          | 7.9  |  | 
| |                       |  |                                                        |  |                          |      |  | 

In
2004, a contingency fee in favor of Ausley & McMullen, P.A. originally
granted in 1996 expired.

The
costs and fees for the years involved in the Florida litigation exceed the
amount of the funds Coastal Petroleum will receive under the Agreement with the
State.  Therefore, if the Agreement is
finallly consummated, there is no net recovery and no contingency fees due
under the contingent interests granted as discussed above.

In
addition, Coastal Petroleum has agreed to pay Gaylord Merlin a contingent fee
in connection with compensation awarded to Coastal Petroleum for the taking of
Lease 224-A, Lease 224-B and Lease 248. 
Gaylord Merlin has agreed to accept payment of its current accumulated
fees and expenses, $783,423, and release any claim to a contingency fee in
light of the Agreement with the State.

As
part of the process undertaken in arriving at an agreement with the State to
repurchase Coastal Petroleums Leases, an agreement was entered between the
Company and John Aurell authorizing Mr. Aurell to represent the Company as a
settlement consultant in discussions with the State.  Under the agreement with Mr. Aurell, he will be paid $465,000 if
the Agreement with the State is finalized as it is currently structured.

Uncertainty/ No Assurances

The
Agreement with the State is conditioned upon approval of the funding and
submission of documents.  If the
Agreement does not proceed to finalization, Coastal Petroleum and/or Coastal
Caribbean may not prevail on any of the issues set forth above and may not
recover compensation for any of their claims. 
In addition, even if Coastal Petroleum were to prevail on any or all of
the issues to be decided, Coastal

21

---

Caribbean or
Coastal Petroleum may not have sufficient financial resources to survive until
such decisions become final.  In the
unlikely event that the State of Florida were to grant a permit to drill any
wells for which applications have been filed, the wells drilled may not be
successful and may not lead to production of any oil or gas in commercial
quantities.

|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders
|        |                                                    
|        | None.                                              

22

---

PART II

|        |                                                                                                                 |                    
|------- | --------------------------------------------------------------------------------------------------------------- | -------------------
|Item 5. | Market for the Companys Common Stock,
  Related Stockholder Matters and Issurer Purchases of Equity Securities
|        |                                                                                                                
|        | (a)                                                                                                             | Market Information.

The
principal market for the Companys common stock is in the over-the-counter
market on the Electronic Bulletin Board of the National Association of
Securities Dealers, Inc. under the symbol COCBE.OB.  The quarterly high and low closing prices on the Electronic
Bulletin Board during the last two years were as follows:

On
February 13, 2003, Coastal Caribbean shares of common stock were delisted from
trading on the Boston Stock Exchange because the Companys shareholders equity
was less than the $1,000,000 minimum amount required by the Exchange.

| |      |  |  |             |  |  |             |  |  |             |  |  |             | 
| | ---- |  |  | ----------- |  |  | ----------- |  |  | ----------- |  |  | ----------- | 
|
| | 2003 |  |  | 1st quarter |  |  | 2nd quarter |  |  | 3rd quarter |  |  | 4th quarter | 
| |      |  |  |             |  |  |             |  |  |             |  |  |             | 
| |      |  |  |             |  |  |             |  |  |             |  |  |             | 
| | High |  |  | .25         |  |  | .16         |  |  | .51         |  |  | .45         | 
| | Low  |  |  | .10         |  |  | .09         |  |  | .16         |  |  | .05         | 
| |      |  |  |             |  |  |             |  |  |             |  |  |             | 
| | 2004 |  |  | 1st quarter |  |  | 2nd quarter |  |  | 3rd quarter |  |  | 4th quarter | 
| |      |  |  |             |  |  |             |  |  |             |  |  |             | 
| |      |  |  |             |  |  |             |  |  |             |  |  |             | 
| | High |  |  | .09         |  |  | .27         |  |  | .26         |  |  | .15         | 
| | Low  |  |  | .05         |  |  | .06         |  |  | .10         |  |  | .05         | 



|                                                                                                                                                                                                                                                                                                                                                          |     |           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ----------
|                                                                                                                                                                                                                                                                                                                                                          | (b) | Holders.  
|                                                                                                                                                                                                                                                                                                                                                          |     |           
|The
  approximate number of record holders of the Companys common stock at May 31,
  2005 was 8,200.                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                          | (c) | Dividends.
|                                                                                                                                                                                                                                                                                                                                                          |     |           
|The
  Company has never declared or paid dividends on its common stock and it does
  not anticipate declaring or paying any dividends in the foreseeable
  future.  The Company plans to retain
  any future earnings to reduce the deficit accumulated during the development
  stage of $40,124,000 at December 31, 2004 and to finance its operations.
|                                                                                                                                                                                                                                                                                                                                                         
|The
  Companys Memorandum of Association and Bye-laws do not permit the Company to
  repurchase or redeem shares of its common stock.                                                                                                                                                                                                                   

23

---

Foreign
Exchange Control Regulations

The Company
is subject to the applicable laws of The Islands of Bermuda relating to
exchange control, but has the permission of the Foreign Exchange Control of Bermuda
to carry on business in, to receive, disburse and hold United States dollars
and dollar securities under its designation as an External Account
Company.  The Company has been advised
that, although as a matter of law it is possible for such designation to be
revoked, there is little precedent for revocation under Bermuda law.

Income
and Withholding Taxes

Coastal
Caribbean is a Bermuda corporation. 
Bermuda currently imposes no taxes on corporate income or capital gains
realized outside of Bermuda.  Any
amounts received by Coastal Caribbean from United States sources as dividends,
interest, or other fixed or determinable annual or periodic gains, profits and
income, will be subject to a 30% United States withholding tax.  In addition, any dividends from its domestic
subsidiary, Coastal Petroleum, will not be eligible for the 100% dividends
received deduction, which is allowable in the case of a United States parent
corporation.  Shares of the Company held
by persons who are citizens or residents of the United States are subject to
federal estate and gift and local inheritance taxation.  Any dividends received by such persons will
also be subject to federal, State and local income taxation.  The foregoing rules are of general
application only, and reflect law in force as of the date of this report.

A
convention between Bermuda and the United States relating to mutual assistance
on tax matters became operative in 1988.

Passive
Foreign Investment Company Rules

The
Internal Revenue Code of 1986, as amended, provides special rules for
distributions received by U.S. holders on stock of a passive foreign investment
company (PFIC), as well as amounts received from the sale or other disposition
of PFIC stock.

Under
the PFIC rules, a non-U.S. corporation will be classified as a PFIC for U.S.
federal income tax purposes in any taxable year in which, after applying
certain look-through rules, either (1) at least 75 percent of its gross income
is passive income or (2) at least 50 percent of the gross value of its assets
is attributable to assets that produce passive income or are held for the
production of passive income.

Passive
income for this purpose generally includes dividends, interest, royalties,
rents, and gains from commodities and securities transactions. Special rules
apply in cases where a foreign corporation owns directly or indirectly at least
a 25 percent interest in a subsidiary, measured by value.  In this case, the foreign corporation is
treated as holding its proportionate share of the assets of the subsidiary and
receiving directly its proportionate share of the income of the subsidiary when
determining whether it is a PFIC.  Thus,
Coastal Caribbean would be deemed to receive its pro rata share of the income
and to hold its pro rata share of the assets, of Coastal Petroleum.

24

---

Based
on certain estimates of its gross income and gross assets and the nature of its
business, Coastal Caribbean would be classified as a PFIC for the years 1987
through 2004.  Once an entity is
considered a PFIC for a taxable year, it will be treated as such for all
subsequent years with respect to owners holding the stock in a year that it was
classified as a PFIC under the income or asset test described above. Whether
the Company will be a PFIC under either of these tests in future years will be
difficult to determine because the tests are applied annually.  Based upon Coastal Caribbeans current
passive income, it is likely that Coastal Caribbean will be classified as a
PFIC in 2005.

If
Coastal Caribbean is classified as a PFIC with respect to a U.S. holder any
gain from the sale of, and certain distributions with respect to, shares of our
common stock, would cause a U.S. holder to become liable for U.S. federal
income tax under Code section 1291 (the interest charge regime).  The tax is computed by allocating the amount
of the gain on the sale or the amount of the distribution, as the case may be,
to each day in the U.S. shareholders holding period.  To the extent that the amount is allocated to a year, other than
the year of the disposition or distribution, in which the corporation was
treated as a PFIC with respect to the U.S. holder, the income will be taxed as
ordinary income at the highest rate in effect for that year, plus an interest
charge.  The interest charge would
generally be calculated as if the distribution or gain had been recognized
ratably over the U.S. holders holding period (for PFIC purposes) for the
shares.  To the extent an amount is
allocated to the year of the disposition or distribution, or to a year before
the first year in which the corporation qualified as a PFIC, the amount so
allocated is included as additional gross income for the year of the
disposition or distribution.   A U.S.
holder also would be required to make an annual return on IRS Form 8621 that
describes any distributions received with respect to our shares and any gain
realized on the sale or other disposition of our shares.

As
an alternative to taxation under the interest charge regime, a U.S. holder
generally can elect, subject to certain limitations, to annually take into
gross income the appreciation or depreciation in our common shares value
during the tax year (mark-to-market election). If a U.S. holder makes the
mark-to-market election, the U.S. holder will not be subject to the
above-described rule.   Instead, if a
U.S. holder makes the mark-to-market election, the U.S. holder recognizes each
year an amount equal to the difference as of the close of the taxable year
between the U.S. holders fair market value of the common shares and the
adjusted basis in the common shares. Losses would be allowed only to the extent
of net gain previously included by the U.S. holder under the mark-to-market
election for prior taxable years. Amounts included in or deducted from income
under the mark-to-market election and actual gains and losses realized upon the
sale or disposition of the common shares, subject to certain limitations, will
be treated as ordinary gains or losses.  
If the mark-to-market election is made for a year other than the first
year in the U.S. holders holding period in which the corporation was a PFIC,
the first years mark-to-market inclusion, if any, is taxed as if it were a
distribution subject to the interest charge regime discussed above.

Another
alternative election which would allow a U.S. holder to elect to take its pro
rata share of Coastal Caribbeans undistributed income into gross income as it
is earned by Coastal Caribbean (QEF election) would only be available to a U.S.
holder if Coastal Caribbean provided certain information to the shareholders of
Coastal

25

---

Caribbean. Coastal Caribbean has had no undistributed
income for the years 1987 through 2004. 
If the QEF election is made in a year other than the first year of the
U.S. holders holding period in which the foreign corporation is a PFIC, both
the QEF regime and interest charge regime can apply, unless a special election
is made.  Under this special election,
the taxpayer is treated as if it disposed of its PFIC stock in a transaction
subject to the interest charge rules to the extent gain is deemed to be
recognized.  Once this election is made,
the holder will be subject only to the QEF regime.

Recent Sales of Unregistered
Securities

None

Purchases
of Equity Securities by th Isuer and Affiliated Purchasers

None

|        |                                            
|------- | -------------------------------------------
|Item 6. | Selected Consolidated Financial Information

The
following selected consolidated financial information (in thousands except for
per share amounts) for the Company insofar as it relates to each of the five
years in the period ended December 31, 2004 has been extracted from the
Companys consolidated financial statements.

|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|------------------------------------------------------------ |  | ------------------------ | ------- | ---- | - | ------- | - | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                             |  | Years ended December 31, |        
|                                                             |  |                          |        
|                                                             |  | 2004                     |         | 2003 |   | 2002    |   | 2001 |         | 2000 |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Net loss                                                     |  | $                        | (673    | )    | $ | (1,008  | ) | $    | (2,448  | )    | $ | (6,585  | ) | $ | (1,386  | )
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Net loss per share  (basic and
  diluted)                    |  |                          | (.01    | )    |   | (.02    | ) |      | (.05    | )    |   | (.15    | ) |   | (.03    | )
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Cash and cash equivalents and marketable securities          |  |                          | -       |      |   | 3       |   |      | 292     |      |   | 609     |   |   | 2,959   |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Unproved oil, gas and, mineral properties (full cost method) |  |                          | -       |      |   | -       |   |      | -       |      |   | -       |   |   | 4,145   |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Total assets                                                 |  |                          | 17      |      |   | 91      |   |      | 707     |      |   | 1,077   |   |   | 7,497   |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Shareholders (deficit) equity:                              |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Common stock                                                 |  |                          | 5,545   |      |   | 5,545   |   |      | 5,545   |      |   | 5,216   |   |   | 5,216   |  
|Capital in excess of par value                               |  |                          | 32,138  |      |   | 32,138  |   |      | 32,068  |      |   | 31,498  |   |   | 31,498  |  
|Deficit accumulated during the
  development stage           |  |                          | (40,124 | )    |   | (39,451 | ) |      | (38,443 | )    |   | (35,996 | ) |   | (29,410 | )
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Total shareholders (deficit) equity                         |  |                          | (2,441  | )    |   | (1,768  | ) |      | (830    | )    |   | 718     |   |   | 7,304   |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Common stock shares outstanding (weighted average)           |  |                          | 44,212  |      |   | 44,212  |   |      | 44,734  |      |   | 43,468  |   |   | 40,844  |  
|                                                             |  |                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  

26

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|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations

Statements
included in Managements Discussion and Analysis of Financial Condition and
Results of Operations which are not historical in nature are intended to be
forward looking statements. The Company cautions readers that forward looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward looking
statements. For a discussion of certain risk factors affecting the Company,
please see Risk Factors above.

Critical Accounting Policies

The
Company follows the full cost method of accounting for its oil and gas
properties.  All costs associated with
property acquisition, exploration and development activities whether successful
or unsuccessful are capitalized.  Since the Companys properties were
undeveloped and nonproducing and the subject of litigation, capitalized costs
were not being amortized, however, as more fully described in Note 3, these
costs were written off in 2001.

The
capitalized costs are subject to a ceiling test which basically limits such
costs to the aggregate of the estimated present value discounted at a 10% rate
of future net revenues from proved reserves, based on current economic and
operating conditions, plus the lower of cost or fair market value of unproved
properties.  The Company assesses
whether its unproved properties are impaired on a periodic basis.  This assessment is based upon work completed
on the properties to date, the expiration date of its leases and technical data
from the properties and adjacent areas. 
These properties are subject to extensive litigation with the State of
Florida.

During the year 2001, the Company concluded that its
leases had been taken and its property interests were impaired by the actions
taken by the State of Florida and therefore, had recorded an impairment charge
to reflect the write off of the costs of unproved oil, gas and minerals
properties.  See Note 4. Litigation. 
All costs incurred since 2001 in connection with the Companys Florida
leases have been expensed as incurred.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |                                                                                                                 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ----------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (1) | Liquidity and Capital Resources                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |                                                                                                                 
|Statements
  included in Managements Discussion and Analysis of Financial Condition and
  Results of Operations which are not historical in nature are forward looking
  statements.  The Company cautions
  readers that forward looking statements are subject to certain risks and uncertainties
  that could cause actual results to differ materially from those indicated in
  the forward looking statements.  Among
  the risks and uncertainties are:
|                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 1.  | the uncertainty of any decision favorable to Coastal Petroleum in its
  litigation against the State of Florida;
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 2.  | the substantial cost of continuing the litigation;                                                              

27

---

| |    |                                                                                                                                       
| | -- | --------------------------------------------------------------------------------------------------------------------------------------
| | 3. | the successful consummation of the Agreement between the Company and
  the State to surrender the leases in exchange for compensation.

As
more fully described in Notes 1 and 4 to the consolidated financial statements,
we have a working capital deficiency, have incurred recurring losses and have a
deficit accumulated during the development stage.  We have been and continue to be involved in several legal proceedings
against the State of Florida which has limited our ability to commence
development activities on our unproven oil and gas properties or obtain
compensation for certain property rights we believe have been taken.  These situations raise substantial doubt
about our ability to continue as a going concern.

If
the Agreement with the State, as described in Item 1(a) General Development of Business,
is finalized, the Company will have sufficient funds to pay bills as they come
due and to continue operations.  Under
the Agreement with the State, the Company will receive and distribute the
following:

| |                                                               |  |   |            | 
| | ------------------------------------------------------------- |  | - | ---------- | 
| | Agreement
  with the State                                    |  | $ | 12,500,000 | 
| |                                                               |  |   |            | 
| | To Lykes
  Mineral Corporation                                |  |   | 1,390,000  | 
| | To Outside
  Royalty Holders                                  |  |   | 2,225,000  | 
| |                                                               |  |   |            | 
| |                                                               |  |   |            | 
| | To the
  Company and its Subsidiary                           |  |   | 8,885,000  | 
| |                                                               |  |   |            | 
| | To
  Settlement Consultant                                    |  |   | 465,000    | 
| | To Company
  Creditors (as of April 30, 2005)                 |  |   |            | 
| | CCO                                                           |  |   | 230,000    | 
| | CPC                                                           |  |   | 2,265,000  | 
| |                                                               |  |   |            | 
| |                                                               |  |   |            | 
| | Amount to
  Company and Subsidiary After payment to Creditors |  | $ | 5,925,000  | 

The other
shareholders of Coastal Petroleum have agreed to sell their shares back to
Coastal Petroleum for a total of $801,923.03 out of the remaining funds in the
subsidiary.  Coastal will then own 100%
of the subsidiary.

Our
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
amounts and classification of liabilities which may result from the outcome of
these uncertainties.

Liquidity

The Company currently has a working capital
deficiency, has a limited amount of cash, has incurred recurring losses and has
a deficit accumulated during the development stage.   We have been and continue to be involved in several legal
proceedings against the State of Florida which has limited our ability to
commence development activities on our unproven oil and gas properties or
obtain compensation for certain property rights we believe have been taken.  The cost of that litigation has been
substantial, which requires the Company to continually obtain additional
capital.

28

---

At December 31, 2004, Coastal Caribbean had no
cash available.  The Company has
received a commitment from some of its Officers to loan the Company funds
during 2005 which management believes should be sufficient to fund the
Companys operations through June 2005, provided that payments to the Companys
litigation counsel and to the Companys salaried employee are deferred and
provided further that payments to other Company counsel are also deferred.  These loans totaled approximately $80,000
through December 31, 2004.
There can be no assurances that management will continue to make loans to the
Company or that these loans will allow the Company to continue operations for
any significant length of time.

Certain
directors, officers, legal counsel and administrative consultants have agreed
to defer the payment of their salaries and fees.  At December 31, 2004, the amount of salaries and fees being
deferred totaled approximately $1,590,000.  The payment due dates for the Companys
annual rental payments on its Florida leases of approximately $59,000 have been
extended during the time the State and Coastal have been in discussions and
they are currently not due.   No amounts have been accrued related to these
leases in the current year.  The Company
may have to suspend or cease operations and may have to wind up the company or
be forced into insolvent liquidation under the laws of Bermuda unless and until
the Company can secure additional funds for operations.

Coastal
Caribbean and Coastal Petroleum have attempted to raise funds from the other
shareholders of Coastal Petroleum and from others.  Since March 2003, Management has been unsuccessful at raising
additional funds.

These
situations raise substantial doubt about the Companys ability to continue as a
going concern.  However, if the Agreement with the State, as described
in Item
1(a) General Development of Business, is finalized, the Company will have
sufficient funds to pay bills as they come due and to continue operations.  The consolidated financial statements do not
include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or amounts and classification of liabilities, which may result from the
outcome of this uncertainty.

| |     |                      
| | --- | ---------------------
| | (2) | Results of Operations

The
Company, a development stage enterprise, has never had substantial revenues and
has operated at a loss each year since its inception in 1953.  During the three years ended
December 31, 2004, the Company spent approximately $2,219,000 on legal expenses
primarily for the lawsuits against the State of Florida relating to drilling
permits and royalty interests.

2004 vs. 2003

The Company incurred a loss of $673,000 for
the year 2004, compared to a loss of $1,008,000 for the year 2003.

Interest income and other income decreased 100%
in 2004 to $-0- from $1,000 in 2003 because less funds were available for
investment.

Legal fees and costs decreased 4% in 2004
to $327,000 from $342,000 in 2003. Legal fees and costs decreased in 2004 as
compared with 2003 due to a reduction in

29

---

expenditures
for legal fees and geological experts related to Companys lawsuit against the
State of Florida seeking compensation for the States alleged taking of its
property rights to explore for oil and gas within its state Lease 224-A.

Administrative expenses decreased 55% in 2004 to
$208,000 from $458,000 in
2003 primarily because of a reduction in Accounting and administrative expenses
and other corporate expenses.

Salaries expense decreased 5% in 2004 to $113,000
from $119,000 in 2003 due
to the reduction in personnel from two individuals to one for the entire year.

Shareholder communications decreased 19% in
2004 from $25,000 compared to $31,000 in 2003. These costs remain low because
there was no annual meeting of shareholders held in 2004 or 2003.

Write off of unproved properties decreased 100% in
2004 from $-0- compared to $59,000
in 2003 as the Company has continued to conclude that the value of its
leases had been taken and its property interests had been impaired by actions
taken by the State of Florida.  All costs incurred in 2003 in connection with
the Companys Florida leases have been expensed as incurred.  No amounts were paid in 2004 for these
leases as the payment dates have been extended during discussion with the State
of Florida.

2003 vs. 2002

The Company incurred a loss of $1,008,000
for the year 2003, compared to a loss of $2,488,000 for the year 2002.

Interest income and other income decreased 86%
from $7,000 in 2002 to $1,000 in 2003 because less funds were available for investment
and in part due to lower interest rates.

Legal fees and costs decreased 78% to
$342,000 for 2003 from $1,549,000 in 2002. 
Legal fees and costs decreased in 2003 as compared with 2002 due to a
reduction in expenditures for legal fees and fees paid to geological experts
related to the trial of the Companys lawsuit against the State of Florida
seeking compensation for the States alleged taking of its property rights to
explore for oil and gas within its state Lease 224-A.

Administrative expenses decreased 31% in 2003
to $458,000 from $662,000 in 2002 primarily because of a reduction in the cost
of liability insurance and a reduction in 
Accounting and Administrative costs resulting from the closing of the
Companys New Jersey office in 2003.

Salaries decreased 22% in 2003 to $119,000 from
$152,000 in 2002 as
the Company reduced its staff from two to one employee.

Shareholder communications costs decreased
to $31,000 in 2003 compared to $32,000 in 2002. These costs remain low because
there was no annual meeting of shareholders held in 2003 or 2002.

30

---

Write
off of unproved properties totaled $59,000 in 2003 and 2002.All costs incurred in 2003
and 2002 in connection with the Companys Florida leases have been and all
future costs will be expensed as incurred.

|         |                                                          
|-------- | ---------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure About Market Risk

The
Company does not have any significant exposure to market risk as the only
market risk sensitive instruments are its investments in marketable
securities.  At December 31, 2004, the
carrying value of such investments (including those classified as cash and cash
equivalents) was approximately $179, the fair value was $179 and the face value
was $179.  Since the Company expects to
hold the investments to maturity, the maturity value should be realized.

31

---



|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

The Board of Directors 
Coastal Caribbean Oils & Minerals, Ltd.

We have audited the
accompanying consolidated statements of operations, cash flows, and common
stock and capital in excess of par value of Coastal Caribbean Oils &
Minerals, Ltd. (a development stage company) for the year ended December 31,
2002. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. We were not engaged to perform an audit of the Companys
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated results of operations and cash flows of
Coastal Caribbean Oils & Minerals, Ltd. for the year ended December 31,
2002 in conformity with U.S. generally accepted accounting principles.

The accompanying
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. As more fully described in Notes 1 and 4 to
the consolidated financial statements, the Company has a working capital
deficiency, has incurred recurring losses and has a deficit accumulated during
the development stage. In addition, the Company has been and continues to be
involved in several legal proceedings against the State of Florida which have
limited the Companys ability to commence development activities on its
unproved oil and gas properties or obtain compensation for certain property
rights it believes have been confiscated. These situations raise substantial
doubt about the Companys ability to continue as a going concern. The
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
amounts and classification of liabilities that may result from the outcome of
these uncertainties.

|                      |                         | 
|--------------------- | ----------------------- | 
|                      | /s/
  Ernst & Young LLP
|February 12, 2003     |                         | 
|Stamford, Connecticut |                         | 

32

---



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors,
Coastal Caribbean Oils & Minerals, Ltd.:

We have audited the accompanying consolidated balance
sheets of Coastal Caribbean Oils & Minerals, Ltd. (a development stage
company) as of December 31, 2004 and 2003, and the related consolidated
statements of operations, cash flows and common stock and capital in excess of
par value for the years ended December 31, 2004 and 2003 and for the period
from January 31, 1953 (inception) to December 31, 2004. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. We were not engaged to perform an audit of the Companys internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Coastal Caribbean Oils & Minerals, Ltd. as of
December 31, 2004 and 2003, and the consolidated results of its operations
and cash flows for the year ended December 31, 2004 and 2003 and for the period
from January 31, 1953 (inception) to December 31, 2004, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going
concern.  As more fully described in
Notes 1 and 4 to the consolidated financial statements, the Company had a
working capital deficiency, has incurred recurring losses and has a deficit
accumulated during the development stage. 
In addition, the Company has been and continues to be involved in
several legal proceedings against the State of Florida which have limited the
Companys ability to commence development activities on its unproved oil or gas
properties or obtain compensation for certain property rights it believes have
been confiscated.  These situations
raise substantial doubt about the Companys ability to continue as a going
concern.  The consolidated financial
statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or amounts and
classifications or liabilities that may result from the outcome of these uncertainties.

|                                       |                             | 
|-------------------------------------- | --------------------------- | 
|                                       | /s/ James Moore & Co., P.L.
|March 17, 2005, except for Note 10,    |                             | 
|as to which the
  date is May 16, 2005 |                             | 
|Gainesville, Florida                   |                             | 

33

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.(A Bermuda Corporation)
A Development Stage Company

CONSOLIDATED BALANCE SHEETS(Expressed in U.S.
dollars)



|                                                       |  |              |             |      |   |             |  
|------------------------------------------------------ |  | ------------ | ----------- | ---- | - | ----------- | -
|                                                       |  | December 31, |            
|                                                       |  |              |            
|                                                       |  | 2004         |             | 2003 |  
|                                                       |  |              |             |      |  
|Assets                                                 |  |              |             |      |   |             |  
|Current assets:                                        |  |              |             |      |   |             |  
|Cash and cash equivalents                              |  | $            | 179         |      | $ | 2,875       |  
|Prepaid expenses and other                             |  |              | 16,322      |      |   | 87,947      |  
|                                                       |  |              |             |      |   |             |  
|Total current assets                                   |  |              | 16,501      |      |   | 90,822      |  
|                                                       |  |              |             |      |   |             |  
|Contingent litigation claim
  (Note 4)                 |  |              | -           |      |   | -           |  
|                                                       |  |              |             |      |   |             |  
|                                                       |  |              |             |      |   |             |  
|Total assets                                           |  | $            | 16,501      |      | $ | 90,822      |  
|                                                       |  |              |             |      |   |             |  
|                                                       |  |              |             |      |   |             |  
|Liabilities and Shareholders(Deficit) Equity          |  |              |             |      |   |             |  
|Current liabilities:                                   |  |              |             |      |   |             |  
|Accounts payable and accrued
liabilities               |  | $            | 863,127     |      | $ | 805,110     |  
|Amounts due to related parties                         |  |              | 1,594,369   |      |   | 1,053,800   |  
|                                                       |  |              |             |      |   |             |  
|Total current liabilities                              |  |              | 2,457,496   |      |   | 1,858,910   |  
|                                                       |  |              |             |      |   |             |  
|                                                       |  |              |             |      |   |             |  
|Minority interests                                     |  |              | -           |      |   | -           |  
|                                                       |  |              |             |      |   |             |  
|Shareholders (deficit)
  equity:                      |  |              |             |      |   |             |  
|Common stock, par value $.12 per
share:                |  |              |             |      |   |             |  
|Authorized - 250,000,000 shares                        |  |              |             |      |   |             |  
|Outstanding
 46,211,604 shares,
  respectively        |  |              | 5,545,392   |      |   | 5,545,392   |  
|Capital in excess of par value                         |  |              | 32,137,811  |      |   | 32,137,811  |  
|                                                       |  |              |             |      |   |             |  
|                                                       |  |              | 37,683,203  |      |   | 37,683,203  |  
|Deficit accumulated during the
  development stage     |  |              | (40,124,198 | )    |   | (39,451,291 | )
|                                                       |  |              |             |      |   |             |  
|Total shareholders (deficit)
  equity                 |  |              | (2,440,995  | )    |   | (1,768,088  | )
|                                                       |  |              |             |      |   |             |  
|Total liabilities and
  shareholders (deficit) equity |  | $            | 16,501      |      | $ | 90,822      |  
|                                                       |  |              |             |      |   |             |  

See accompanying notes.

34

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.(A Bermuda Corporation)
A Development Stage Company

CONSOLIDATED STATEMENTS OF OPERATIONS(Expressed in U.S.
Dollars)



|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|---------------------------------------------------------------------------------------------- |  | ------------------------- | -------------------------------------------------- | ---- | - | ---------- | - | --------------- | ---------- | - | - | ----------- | -
|                                                                                               |  | Years
  ended December 31 | For theperiod from
  Jan. 31, 1953
  (inception)to |     
|                                                                                               |  |                           |                                                    |      |  
|                                                                                               |  | 2004                      |                                                    | 2003 |   | 2002       |   | Dec.
  31, 2004 |           
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |           
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Interest and other income                                                                      |  | $                         | 1                                                  |      | $ | 658        |   | $               | 7,357      |   | $ | 3,877,571   |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Expenses:                                                                                      |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Legal fees and costs                                                                           |  |                           | 327,091                                            |      |   | 342,451    |   |                 | 1,549,178  |   |   | 16,899,679  |  
|Administrative expenses                                                                        |  |                           | 208,414                                            |      |   | 457,649    |   |                 | 662,390    |   |   | 9,735,693   |  
|Salaries                                                                                       |  |                           | 112,838                                            |      |   | 118,745    |   |                 | 151,800    |   |   | 3,755,811   |  
|Shareholder communications                                                                     |  |                           | 24,565                                             |      |   | 30,746     |   |                 | 32,286     |   |   | 3,973,092   |  
|Write off of unproved
  properties                                                             |  |                           | -                                                  |      |   | 59,247     |   |                 | 59,247     |   |   | 5,560,494   |  
|Exploration costs                                                                              |  |                           | -                                                  |      |   | -          |   |                 | -          |   |   | 247,465     |  
|Lawsuit judgments                                                                              |  |                           | -                                                  |      |   | -          |   |                 | -          |   |   | 1,941,916   |  
|Minority interests                                                                             |  |                           | -                                                  |      |   | -          |   |                 | -          |   |   | (632,974    | )
|Other                                                                                          |  |                           | -                                                  |      |   | -          |   |                 | -          |   |   | 364,865     |  
|Contractual services                                                                           |  |                           | -                                                  |      |   | -          |   |                 | -          |   |   | 2,155,728   |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|                                                                                               |  |                           | 672,908                                            |      |   | 1,008,838  |   |                 | 2,454,901  |   |   | 44,001,769  |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Net loss                                                                                       |  | $                         | (672,907                                           | )    | $ | (1,008,180 | ) | $               | (2,447,544 | ) |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Deficit accumulated during the
  development stage                                             |  |                           |                                                    |      |   |            |   |                 |            |   | $ | (40,124,198 | )
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Net loss per share based on
  weighted average number of shares outstanding during the period: |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Basic and diluted EPS                                                                          |  | $                         | (.01                                               | )    | $ | (.02       | ) | $               | (.05       | ) |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  
|Weighted average number of
  shares outstanding (basic and diluted)                            |  |                           | 46,211,604                                         |      |   | 46,211,604 |   |                 | 44,734,456 |   |   |             |  
|                                                                                               |  |                           |                                                    |      |   |            |   |                 |            |   |   |             |  

See accompanying notes.

35

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.(A Bermuda Corporation)
A Development Stage Company

CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in U.S.
Dollars)



|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|----------------------------------------------------------------------------------------------------------- |  | -------------------------- | -------- | ------------------------------------------------ | - | ---------- | - | --------------- | ---------- | - | - | ----------- | -
|                                                                                                            |  | Years
  ended December 31, |          | For the periodfrom Jan. 31, 1953
  (inception)To |  
|                                                                                                            |  |                            |          |                                                  |   |           
|                                                                                                            |  | 2004                       |          | 2003                                             |   | 2002       |   | Dec.
  31, 2004 |           
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |           
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Operating
  activities:                                                                                     |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Net loss                                                                                                    |  | $                          | (672,907 | )                                                | $ | (1,008,180 | ) | $               | (2,447,544 | ) | $ | (40,124,199 | )
|Adjustments to reconcile net loss to net cash used in operating
  activities:                               |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Minority interest                                                                                           |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | (632,974    | )
|Write off of unproved properties                                                                            |  |                            | -        |                                                  |   | 59,247     |   |                 | 59,247     |   |   | 5,619,741   |  
|Common stock issued for services                                                                            |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | 119,500     |  
|Compensation recognized for stock option grant                                                              |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | 75,000      |  
|Recoveries from previously written off
properties                                                           |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | 252,173     |  
|Net change in:                                                                                              |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Prepaid expenses and other                                                                                  |  |                            | 71,625   |                                                  |   | 326,752    |   |                 | (52,500    | ) |   | (16,323     | )
|Accrued liabilities                                                                                         |  |                            | 518,296  |                                                  |   | 322,208    |   |                 | 1,178,082  |   |   | 2,377,208   |  
|Other assets                                                                                                |  |                            | -        |                                                  |   | -          |   |                 | 90,391,    |   |   | -           |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Net cash used in operating activities                                                                       |  |                            | (82,986  | )                                                |   | (299,973   | ) |                 | (1,172,324 | ) |   | (32,329,874 | )
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Investing
  activities:                                                                                     |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Additions to oil, gas, and mineral properties
net of assets acquired
  for common stock and  reimbursements |  |                            | -        |                                                  |   | (59,247    | ) |                 | (59,247    | ) |   | (3,740,182  | )
|Proceeds from relinquishment of surface
rights                                                              |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | 246,733     |  
|Notes receivable                                                                                            |  |                            | -        |                                                  |   | -          |   |                 | 15,000     |   |   | -           |  
|Purchase of fixed assets                                                                                    |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | (61,649     | )
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Net cash provided by (used in) investing activities                                                         |  |                            | -        |                                                  |   | (59,247    | ) |                 | (44,247    | ) |   | (3,555,098  | )
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Financing
  activities:                                                                                     |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Loans from Officers                                                                                         |  |                            | 80,290   |                                                  |   | -          |   |                 | -          |   |   | 80,290      |  
|Sale of common stock, net of expenses                                                                       |  |                            | -        |                                                  |   | -          |   |                 | 899,642    |   |   | 30,380,612  |  
|Shares issued upon exercise of options                                                                      |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | 884,249     |  
|Sale of shares by subsidiary                                                                                |  |                            | -        |                                                  |   | 70,000     |   |                 | -          |   |   | 820,000     |  
|Sale of subsidiary shares                                                                                   |  |                            | -        |                                                  |   | -          |   |                 | -          |   |   | 3,720,000   |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Net cash provided by financing activities                                                                   |  |                            | 80,290   |                                                  |   | 70,000     |   |                 | 899,642    |   |   | 35,885,151  |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Net increase (decrease) in cash and cash 
equivalents                                                       |  |                            | (2,696   | )                                                |   | (289,220   | ) |                 | (316,929   | ) |   | 179         |  
|Cash and cash equivalents at beginning of period                                                            |  |                            | 2,875    |                                                  |   | 292,095    |   |                 | 609,024    |   |   | -           |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  
|Cash and cash equivalents at end of period                                                                  |  | $                          | 179      |                                                  | $ | 2,875      |   | $               | 292,095    |   | $ | 179         |  
|                                                                                                            |  |                            |          |                                                  |   |            |   |                 |            |   |   |             |  

See accompanying notes.

36

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.(A Bermuda Corporation)
A Development Stage Company

CONSOLIDATED
STATEMENT OF COMMON STOCK
AND CAPITAL IN EXCESS OF PAR VALUE(Expressed in U.S.
dollars)
For the period from January 31, 1953 (inception) to December 31, 2004

|                                                                                                                                                |  |                      |            |                |   |                                      |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ---------- | -------------- | - | ------------------------------------ |  | - | ---------- | -
|                                                                                                                                                |  | Number
  of
  Shares |            | Common
  Stock |   | Capital
  in
  Excess
  of Par Value | 
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Shares issued for net assets and unrecovered costs at
inception                                                                                 |  |                      | 5,790,210  |                | $ | 579,021                              |  | $ | 1,542,868  |  
|Sales of common stock                                                                                                                           |  |                      | 26,829,486 |                |   | 3,224,014                            |  |   | 16,818,844 |  
|Shares issued upon exercise of stock options                                                                                                    |  |                      | 510,000    |                |   | 59,739                               |  |   | 799,760    |  
|Market value ($2.375 per share) of shares issued in 1953 to
acquire an
  investment                                                             |  |                      | 54,538     |                |   | 5,454                                |  |   | 124,074    |  
|Shares issued in 1953 in exchange for 1/3rd of a
1/60th
  overriding royalty (sold in prior year) in nonproducing leases of Coastal
  Petroleum |  |                      | 84,210     |                |   | 8,421                                |  |   | -          |  
|Market value of shares issued for services rendered during the
period
  1954-1966                                                               |  |                      | 95,188     |                |   | 9,673                                |  |   | 109,827    |  
|Net transfers to restate the par value of common stock
outstanding in
  1962 and 1970 to $0.12 per share                                        |  |                      | -          |                |   | 117,314                              |  |   | (117,314   | )
|Increase in Companys investment (equity) due to capital
transactions
  of Coastal Petroleum in 1976                                            |  |                      | -          |                |   | -                                    |  |   | 117,025    |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1990                                                                                                                    |  |                      | 33,363,632 |                |   | 4,003,636                            |  |   | 19,395,084 |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 300,000    |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1991                                                                                                                    |  |                      | 33,363,632 |                |   | 4,003,636                            |  |   | 19,695,084 |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 390,000    |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1992                                                                                                                    |  |                      | 33,363,632 |                |   | 4,003,636                            |  |   | 20,085,084 |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 1,080,000  |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1993                                                                                                                    |  |                      | 33,363,632 |                |   | 4,003,636                            |  |   | 21,165,084 |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 630,000    |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1994                                                                                                                    |  |                      | 33,363,632 |                |   | 4,003,636                            |  |   | 21,795,084 |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 600,000    |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1995                                                                                                                    |  |                      | 33,363,632 |                |   | 4,003,636                            |  |   | 22,395,084 |  
|Sale of common stock                                                                                                                            |  |                      | 6,672,726  |                |   | 800,727                              |  |   | 5,555,599  |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 480,000    |  
|Exercise of stock options                                                                                                                       |  |                      | 10,000     |                |   | 1,200                                |  |   | 12,300     |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1996                                                                                                                    |  |                      | 40,046,358 |                |   | 4,805,563                            |  |   | 28,442,983 |  
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 240,000    |  
|Exercise of stock options                                                                                                                       |  |                      | 10,000     |                |   | 1,200                                |  |   | 10,050     |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 1997, 1998 and 1999                                                                                                     |  |                      | 40,056,358 |                |   | 4,806,763                            |  |   | 28,693,033 |  
|Sale of common stock                                                                                                                            |  |                      | 3,411,971  |                |   | 409,436                              |  |   | 2,729,329  |  
|Compensation recognized for stock option grant                                                                                                  |  |                      | -          |                |   | -                                    |  |   | 75,000     |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance at December 31, 2000 and 2001                                                                                                           |  |                      | 43,468,329 |                |   | 5,216,199                            |  |   | 31,497,362 |  
|Sale of common stock                                                                                                                            |  |                      | 2,743,275  |                |   | 329,193                              |  |   | 570,449    |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Balance as of December 31, 2002                                                                                                                 |  |                      | 46,211,604 |                |   | 5,545,392                            |  |   | 32,067,811 |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 
|Sale of subsidiary shares                                                                                                                       |  |                      | -          |                |   | -                                    |  |   | 70,000     |  
|Balance as of December 31, 2003 and 2004                                                                                                        |  |                      | 46,211,604 |                | $ | 5,545,392                            |  | $ | 32,137,811 |  
|                                                                                                                                                |  |                      |            |                |   |                                      | 

See accompanying notes.

37

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

1.       Summary of significant accounting policies

Consolidation

The
accompanying consolidated financial statements include the accounts of Coastal
Caribbean Oils & Minerals, Ltd., a Bermuda corporation (Coastal Caribbean)
and its majority owned subsidiary, Coastal Petroleum Company (Coastal
Petroleum), referred to collectively as the Company.  The Company, which has been engaged in a single industry and
segment, is considered to be a development stage company since its exploration
for oil, gas and minerals has not yielded any significant revenue or
reserves.  All intercompany transactions have been
eliminated.  Certain prior year amounts
have been reclassified to conform with the current year presentation.

Cash and Cash Equivalents

The
Company considers all highly liquid short-term investments with maturities of
three months or less at the date of acquisition to be cash equivalents.

Use of Estimates

The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes.  The
outcome of the litigation and the ability to develop the Companys oil and gas
properties will have a significant effect on the Companys financial position
and results of operations. Actual results could differ from those estimates.

Unproved Oil, Gas and
Mineral Properties

The
Company follows the full cost method of accounting for its oil and gas
properties.  All costs associated with
property acquisition, exploration and development activities whether successful
or unsuccessful are capitalized.

38

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

1.        Summary of significant accounting policies
(Contd)

The
Companys properties are undeveloped and nonproducing and the subject of
litigation. Prior to 2001, capitalized costs were not being amortized.  Since 2001, all costs associated with oil
and gas properties are deemed impaired and have been expensed.  See Notes 3 and 4.

The
capitalized costs are subject to a ceiling test which basically limits such
costs to the aggregate of the estimated present value discounted at a 10% rate
of future net revenues from proved reserves, based on current economic and
operating conditions, plus the lower of cost or fair market value of unproved
properties.

The
Company assesses whether its unproved properties are impaired on a periodic
basis.  This assessment is based upon
work completed on the properties to date, the expiration date of its leases and
technical data from the properties and adjacent areas.  These properties are subject to extensive
litigation with the State of Florida.

Sale of Subsidiary Shares

All
amounts realized from the sale of Coastal Petroleum shares have been credited
to capital in excess of par value.

Loss Per Share

Loss
per common share is based upon the weighted average number of common and common
equivalent shares outstanding during the period.  The Companys basic and diluted calculations of EPS are the same
because the exercise of options is not assumed in calculating diluted EPS, as
the result would be anti-dilutive (the Company has continuing losses).

Financial instruments

The
carrying value for cash and cash equivalents, and accounts payable approximates
fair value based on anticipated cash flows and current market conditions.

39

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

1.       Summary of significant accounting policies
(Contd)

Stock Options

The
Company follows the disclosure provisions of Statement of Financial Accounting
Standards (SFAS or Statement) No. 148, Accounting for  Stock-Based Compensation -- Transition and
Disclosure, which amends SFAS No. 123, 
Accounting for Stock-Based Compensation..  SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation, which was
originally provided under SFAS No. 123.

At
December 31, 2004, the Company maintains one stock-based employee compensation plan (see note 6, Stock Option Plan). The Company
accounts for the employee stock compensation plan in accordance with the
intrinsic value-based method prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees. No stock-based
employee compensation expense is reflected in net loss as all
options granted under the plans have an exercise price equal to the fair
market value of the underlying common stock on the date of grant.

New Accounting
Pronouncements

The
Financial Accounting Standards Board (FASB) has issued several new standards
which have implementaion dates subsequent to the Companys year end.  Management does not believe that any of
these new standards will have a material impact on the Companys financial
position, results of operations or cash flows.

Going
Concern

The
Company has a working capital deficiency, has a limited amount of cash, has
incurred recurring losses and has a deficit accumulated during the development
stage.   We have been and continue to be
involved in several legal proceedings against the State of Florida which has
limited our ability to commence development activities on our unproven oil and
gas properties or obtain compensation for certain property rights we believe
have been taken.  The cost of that
litigation has been substantial, which has required the Company to continually
obtain additional capital.

The Company is currently in discussions with the State
of Florida regarding a final settlement of all litigation.  See Note 10.

40

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

1.        Summary of significant accounting policies
(Contd)

The
Company has received a commitment from some of its Officers to loan the Company
funds during 2005 which management believes should be sufficient to fund the
Companys operations through June 2005, provided that payments to the Companys
litigation counsel and to the Companys salaried employee are deferred and
provided further that payments to other Company counsel are also deferred.  These loans totaled approximately $80,000
through December 31, 2004.  There can be
no assurances that management will continue to make loans to the Company or
that these loans will allow the Company to continue operations for any
significant length of time.  The Company
may have to suspend or cease operations and may have to wind up the Company or
be forced into insolvent liquidation under the laws of Bermuda unless and until
the Company can secure additional financing.

These
situations raise substantial doubt about the Companys ability to continue as a
going concern.  The consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or amounts
and classification of liabilities, which may result from the outcome of this
uncertainty.

2.       Coastal
Petroleum Company  Minority Interests

In
1992, Coastal Caribbean granted Lykes Minerals Corp. (Lykes), a wholly owned
subsidiary of Lykes Bros. Inc., an option to acquire 78 shares of Coastal
Petroleum at $40,000 per share.  Lykes
exercised all of its options to purchase Coastal Petroleum shares at a total
cost of $3,120,000 and as of December 31, 2004 and 2003, held 26.35% Coastal
Petroleum, respectively.  See Note 10.

The
Lykes agreement provides that Lykes is entitled to exchange each Coastal
Petroleum share for 100,000 Coastal Caribbean shares, subject to adjustment for
dilution and other factors.  If fully
exercised, that entitlement would leave Lykes with about 15% of Coastal
Caribbeans outstanding shares.  Lykes
also has the right to exchange Coastal Petroleum shares for overriding royalty

41

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

2.       Coastal
Petroleum Company  Minority Interests (Cont.)

interests in Coastal Petroleums properties.  If Lykes were to exchange its 26.35%
interest in Coastal Petroleum for a royalty interest, its overriding royalty
interest in Coastal Petroleums working-interest acreage would be 3.3%.

Coastal
Petroleum shares were owned as follows:

|                  |  |              |        |              |  |   |  |  |        |  |  |   |  |     |  |  |  |  |       |  | 
|----------------- |  | ------------ | ------ | ------------ |  | - |  |  | ------ |  |  | - |  | --- |  |  |  |  | ----- |  | 
|                  |  | December 31, |        | December 31, | 
|                  |  | 2004         |        | 2003         | 
|                  |  |              |        |              | 
|                  |  |              | Shares |              |  | % |  |  | Shares |  |  | % |  |    
|                  |  |              |        |              |  |   |  |  |        |  |  |   |  |    
|Coastal Caribbean |  |              |        | 173          |  |   |  |  | 58.45  |  |  |   |  | 173 |  |  |  |  | 58.45 |  | 
|Lykes             |  |              |        | 78           |  |   |  |  | 26.35  |  |  |   |  | 78  |  |  |  |  | 26.35 |  | 
|Others            |  |              |        | 45           |  |   |  |  | 15.20  |  |  |   |  | 45  |  |  |  |  | 15.20 |  | 
|                  |  |              |        |              |  |   |  |  |        |  |  |   |  |     |  |  |  |  |       |  | 
|                  |  |              |        | 296          |  |   |  |  | 100.0  |  |  |   |  | 296 |  |  |  |  | 100.0 |  | 
|                  |  |              |        |              |  |   |  |  |        |  |  |   |  |     |  |  |  |  |       |  | 

Coastal
Caribbean has been funding the Florida litigation of Coastal Petroleum, its
majority owned subsidiary and paying its operating expenses. This investment
has been eliminated in consolidation, as Coastal Caribbean is required to
record 100% of the losses of Coastal Petroleum because the minority interests
have been fully liquidated and have no further obligation to fund Coastal
Petroleum.

3.        Unproved
Oil, Gas and Mineral Properties

Coastal
Petroleum holds three unproved and nonproducing oil, gas and mineral leases
granted by the Trustees of the Internal Improvement Fund of the State of Florida
(Trustees).  These leases cover
submerged and unsubmerged lands, principally along the Florida Gulf Coast, and
certain inland lakes and rivers throughout the State.

The
two leases bordering the Gulf Coast have been divided into three areas, each
running the entire length of the coastline from Apalachicola Bay to the Naples
area. Coastal Petroleum has certain royalty interests in the inner area, no
interest in the middle area and a 100% working interest in the outside area.

Coastal
Petroleum also has a 100% working interest in Lake Okeechobee, and a royalty
interest in other areas.  Coastal
Petroleum has agreed not to conduct exploration, drilling, or mining operations
on said lake, except with prior approval of the Trustees.

42

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

3.        Unproved
Oil, Gas and Mineral Properties (Cont.)

The
three leases have a term of 40 years from January 6, 1976 and require the
payment of annual lease rentals of totaling $59,247; if oil, gas or minerals
are being produced in economically sustainable quantities at January 6, 2016,
these operations will be allowed to continue until they become uneconomic.  The drilling requirements are governed by
Chapter 20680, Laws of Florida, Acts of 1941. 
Under the 1941 Act, a lessee is required to drill at least one test well
on lands leased in each five year period under the term of the lease.  The Company believes that it is current in
fulfilling its drilling requirements.

The
working interest areas of the three leases are subject to royalties payable to
the Trustees of 121⁄2% on oil and gas, $.50 per long ton of sulfur and 10% on
other minerals.  The leases are subject
to additional overriding royalties which aggregate 1/16th as to oil,
gas and sulfur and 13/600ths as to other minerals.

Since
2001, the Company concluded that its property interests were impaired by the
actions taken by the State of Florida and therefore recorded an impairment
charge to write off its lease costs. 
See Note 4. Litigation.  Although
these costs have been written off, the Company still has legal title to the
leases.  The Companys annual rental
payments on its Florida leases for 2004 have been extended during settlement
discussion with the State of Florida (see Note 10).

4.        Litigation

Potential Settlement
Agreement with the State of Florida

The
Company has negotiated a potential settlement Agreement with the State of
Florida of all claims (see Note 10).

Florida Litigation

Coastal
Petroleum has been involved in various lawsuits for many years.  Coastal Petroleums current litigation now
involves one basic claim: whether the States offshore drilling policy and its
denial of a permit constitute a taking of Coastal Petroleums property. In
addition, Coastal Caribbean is a party to another action in which Coastal
Caribbean claims that certain of its royalty interests have been confiscated by
the State.

Drilling
Permit Litigation -Lease Taking Case (Lease
224-A)

Since
1992, Coastal Petroleum
has sought a permit from the Florida Department of Environmental Protection
(the DEP) to drill an exploratory oil and gas well off Apalachicola,
Florida.  The permit has been repeatedly
denied leaving

43

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

Coastal without a permit
and the alternative of seeking compensation for the taking of its lease.

During
the past year, Coastal Petroleum continued its litigation in an attempt to
obtain compensation for the taking of its lease.  Previously, the trial court ruled that the States denial
of a permit to drill on Lease 224-A did not constitute an unlawful taking of
Coastal Petroleums property and that decision was affirmed by the Florida
First District Court of Appeal.  On April 8, 2004, Coastal Petroleum filed a
Petition for Writ of Certiorari with the United States Supreme Court asking the
Court to accept jurisdiction to consider the action taken by the trial court as
affirmed by the appellate court.  The
States Answer Brief and Coastals subsequent Reply Brief were filed by May 21,
2004.  On June 14, 2004, the United
States Supreme Court denied the Writ of Certiorari, leaving no further avenue
of appeal for this claim.

Meanwhile,
after the trial in 2002, the State filed a motion for an order by the trial
court by which the State seeks to recover $178,315 from Coastal Petroleum,
including expert witness fees, deposition costs and copying costs.  Coastal Petroleum has filed objections and
responses to the States motion, objecting to the costs and requesting an
evidentiary hearing.  On April 9, 2003,
the State agreed not to pursue its motion until after conclusion of the appeal
in this case and the motion has not been set for hearing.

Ancillary Matters to Lease Taking
Case (Lease 224-A)

In
2001, certain holders of royalties, which aggregate approximately 4%, were
allowed to intervene on a limited basis in the Lease 224-A takings
lawsuit.  Counsel for the appealing royalty holders
advised Coastal Petroleum that the royalty holders position is that their
interest is worth substantially more than 4% of whatever judgment may be
awarded to Coastal Petroleum in the litigation and that they intend to make a
claim against any recovery Coastal Petroleum may obtain in the litigation.  Coastal Petroleum informed the Circuit Court
and counsel for the royalty holders that Coastal Petroleum was not making any
claim in the litigation on behalf of any interest the royalty holders may have.

Other Permit Applications

In
order to more fully permit the Apalachicola Reef Play, which includes the St.
George Island prospect, on October 29, 1998, Coastal Petroleum filed four
additional permit applications (1310-1313). 
The DEP requested additional data for these applications and as of June 2, 2005, Coastal Petroleum had not yet
submitted the requested data.  Although
these applications are still pending, Coastal Petroleum does not believe the
DEP will ever grant these permits.

44

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

Coastal Caribbean Royalty
Litigation

The
offshore areas covered by Coastal Petroleums original leases (prior to the
1976 Settlement Agreement) are subject to certain other royalty interests held
by third parties, including Coastal Caribbean. 
In 1994, several of those third parties, including Coastal Caribbean,
which has approximately a 12% interest in any recovery for the royalty,
instituted a separate lawsuit against the State of Florida.  In that lawsuit the royalty holders claim
their interests have been confiscated as a result of the States actions
discussed above and that they are entitled to compensation for that
taking.  The royalty holders were not
parties to the 1976 Settlement Agreement, and the royalty holders contend that
the terms of the Settlement Agreement do not protect the State from taking
claims by those royalty holders.  The
case is still pending in the 2nd Judicial Circuit in Tallahassee,
Leon County, Florida.  Discovery is proceeding and the State has filed a motion for summary
judgment.  Any recovery made in the
royalty holders lawsuit would be shared among the various plaintiffs in that
lawsuit, including Coastal Caribbean, but not Coastal Petroleum.

Lease Taking Case (Lease 224-B)

In
Coastal Petroleums case in the Leon County Circuit Court, Florida seeking
compensation for the State of Floridas alleged taking of its property rights
to explore for oil and gas within its State Lease 224-B remains pending.  During the past year the State filed a
motion for summary judgment in this case seeking to end this case.  Coastal filed a response and the motion was
argued in the Second Judicial Circuit Court for Leon County, Florida on
November 10, 2004.  The judge did not
rule at the hearing, but took the matter under advisement for further
consideration.  To date there has been
no ruling in the case.  The judge
may grant summary judgment, deny it or partially grant it.  A grant of summary judgment on part or all
of the case would be a decision by the court on those issues leaving Coastal
the option of an appeal to try to have the summary judgment reversed and those
matters considered after the trial court receives evidence on those
issues.  If summary judgment is denied,
the case will proceed through discovery and on to trial.

45

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

Contingency Fees

In
1990, Coastal Petroleum agreed to pay an aggregate of 7.9% in contingent fees
based on any net recovery from execution on or satisfaction of judgment or from
settlement of the Florida litigation to the following:

| |                         |  |  |  |                                                        |  |  |                        |      | 
| | ----------------------- |  |  |  | ------------------------------------------------------ |  |  | ---------------------- | ---- | 
| | Holder                  |  |  |  | Relationship to
  Coastal Petroleum
  at Date of Grant |  |  | Net RecoveryPercentage
| |                         |  |  |  |                                                        |  |  |                       
| | Reasoner, Davis &
  Fox |  |  |  | Special Counsel                                        |  |  |                        | 2.00 | 
| | Robert J. Angerer       |  |  |  | Litigation Counsel                                     |  |  |                        | 1.50 | 
| | Benjamin W. Heath       |  |  |  | Chairman of the Board                                  |  |  |                        | 1.25 | 
| | Phillip W. Ware         |  |  |  | President                                              |  |  |                        | 1.25 | 
| | Murtha Cullina LLP      |  |  |  | Securities Counsel to                                  |  |  |                        | 1.00 | 
| |                         |  |  |  | Coastal Caribbean                                      |  |  |                        |      | 
| | James R. Joyce          |  |  |  | Assistant Treasurer                                    |  |  |                        | .30  | 
| | Arthur B. ODonnell     |  |  |  | Vice
  President/Treasurer                             |  |  |                        | .30  | 
| | James J. Gaughran       |  |  |  | Secretary                                              |  |  |                        | .30  | 
| |                         |  |  |  |                                                        |  |  |                        |      | 
| | Total                   |  |  |  |                                                        |  |  |                        | 7.9  | 
| |                         |  |  |  |                                                        |  |  |                        |      | 

In
2004, a contingency fee of 0.75% in favor of Ausley & McMullen, P.A.
originally granted in 1996 expired.

Under
the Agreement, no contingency fees are due as described above as the past costs
and fees for the Florida Litigation exceed the amount of funds the Company will
receive under the Agreement.

As
part of the process undertaken in arriving at an agreement with the State to
repurchase Coastal Petroleums Leases, an agreement was entered between the
Company and John Aurell authorizing Mr. Aurell to represent the Company in
discussions with the State.  Under the
agreement with Mr. Aurell, he will be paid $465,000 if the agreement with the
State is finalized as it is currently structured (See Note 10)

Uncertainty/ No
Assurances

The
Agreement with the State is conditioned upon approval of the funding and
submission of documents.  If the
Agreement is not finalized, Coastal Petroleum and/or Coastal Caribbean may not
prevail on any of the issues set forth above and may not recover compensation
for any of their claims.  In addition,
even if Coastal Petroleum were to prevail on any or all of the issues to be
decided, Coastal Caribbean or Coastal Petroleum may not have sufficient
financial resources to survive until such decisions become final.  In the unlikely event that the State of
Florida were to grant a permit to drill any wells for which applications have
been filed, the wells drilled may not be successful and may not lead to
production of any oil or gas in commercial quantities.

46

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COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

5.        Common Stock

The
Companys Bye-Law No. 21 provides that any matter to be voted upon must be
approved not only by a majority of the shares voted at such meeting, but also
by a majority in number of the shareholders present in person or by proxy and
entitled to vote thereon.

On
July 31, 2002, the Company concluded the sale of 2,743,000 shares at $.50 per
share and realized gross proceeds of approximately $1,372,000 ($900,000 after
expenses of the offering of $90,391 incurred during 2001 and $381,600 during
2002 for an aggregate of approximately $472,000).

On
March 10, 2003, the Company concluded the sale of two shares of Coastal
Petroleum at a price of $25,000 per share. 
On October 7 and 28, 2003, the Company concluded the sale of two shares
of Coastal Petroleum at a price of $10,000 per share.  The Company realized net proceeds of $70,000 in 2003 for these
sales.

There
was no activity in Common Stock during 2004.

47

---

COASTAL
CARIBBEAN OILS & MINERALS, LTD.Notes to Consolidated Financial Statements
December 31, 2004

5.          Common Stock
(Cont.)

The following represents shares
issued upon sales of common stock:

| |      |  |                    |            |                |   |                                    |  |  |   |            |   | 
| | ---- |  | ------------------ | ---------- | -------------- | - | ---------------------------------- |  |  | - | ---------- | - | 
| | Year |  | Number
  of Shares |            | Common
  Stock |   | Capital in
  Excess
  of Par Value | 
| |      |  |                    |            |                |   |                                    | 
| | 1953 |  |                    | 300,000    |                | $ | 30,000                             |  |  | $ | 654,000    |   | 
| | 1954 |  |                    | 53,000     |                |   | 5,300                              |  |  |   | 114,265    |   | 
| | 1955 |  |                    | 67,000     |                |   | 6,700                              |  |  |   | 137,937    |   | 
| | 1956 |  |                    | 77,100     |                |   | 7,710                              |  |  |   | 139,548    |   | 
| | 1957 |  |                    | 95,400     |                |   | 9,540                              |  |  |   | 152,492    |   | 
| | 1958 |  |                    | 180,884    |                |   | 18,088                             |  |  |   | 207,135    |   | 
| | 1959 |  |                    | 123,011    |                |   | 12,301                             |  |  |   | 160,751    |   | 
| | 1960 |  |                    | 134,300    |                |   | 13,430                             |  |  |   | 131,431    |   | 
| | 1961 |  |                    | 127,500    |                |   | 12,750                             |  |  |   | 94,077     |   | 
| | 1962 |  |                    | 9,900      |                |   | 990                                |  |  |   | 8,036      |   | 
| | 1963 |  |                    | 168,200    |                |   | 23,548                             |  |  |   | 12,041     |   | 
| | 1964 |  |                    | 331,800    |                |   | 46,452                             |  |  |   | 45,044     |   | 
| | 1965 |  |                    | 435,200    |                |   | 60,928                             |  |  |   | 442,391    |   | 
| | 1966 |  |                    | 187,000    |                |   | 26,180                             |  |  |   | 194,187    |   | 
| | 1967 |  |                    | 193,954    |                |   | 27,153                             |  |  |   | 249,608    |   | 
| | 1968 |  |                    | 67,500     |                |   | 9,450                              |  |  |   | 127,468    |   | 
| | 1969 |  |                    | 8,200      |                |   | 1,148                              |  |  |   | 13,532     |   | 
| | 1970 |  |                    | 274,600    |                |   | 32,952                             |  |  |   | 117,154    |   | 
| | 1971 |  |                    | 299,000    |                |   | 35,880                             |  |  |   | 99,202     |   | 
| | 1972 |  |                    | 462,600    |                |   | 55,512                             |  |  |   | 126,185    |   | 
| | 1973 |  |                    | 619,800    |                |   | 74,376                             |  |  |   | 251,202    |   | 
| | 1974 |  |                    | 398,300    |                |   | 47,796                             |  |  |   | 60,007     |   | 
| | 1975 |  |                    | -          |                |   | -                                  |  |  |   | (52,618    | ) | 
| | 1976 |  |                    | -          |                |   | -                                  |  |  |   | (8,200     | ) | 
| | 1977 |  |                    | 850,000    |                |   | 102,000                            |  |  |   | 1,682,706  |   | 
| | 1978 |  |                    | 90,797     |                |   | 10,896                             |  |  |   | 158,343    |   | 
| | 1979 |  |                    | 1,065,943  |                |   | 127,914                            |  |  |   | 4,124,063  |   | 
| | 1980 |  |                    | 179,831    |                |   | 21,580                             |  |  |   | 826,763    |   | 
| | 1981 |  |                    | 30,600     |                |   | 3,672                              |  |  |   | 159,360    |   | 
| | 1983 |  |                    | 5,318,862  |                |   | 638,263                            |  |  |   | 1,814,642  |   | 
| | 1985 |  |                    | -          |                |   | -                                  |  |  |   | (36,220    | ) | 
| | 1986 |  |                    | 6,228,143  |                |   | 747,378                            |  |  |   | 2,178,471  |   | 
| | 1987 |  |                    | 4,152,095  |                |   | 498,251                            |  |  |   | 2,407,522  |   | 
| | 1990 |  |                    | 4,298,966  |                |   | 515,876                            |  |  |   | 26,319     |   | 
| | 1996 |  |                    | 6,672,726  |                |   | 800,727                            |  |  |   | 5,555,599  |   | 
| | 2000 |  |                    | 3,411,971  |                |   | 409,436                            |  |  |   | 2,729,329  |   | 
| | 2002 |  |                    | 2,743,275  |                |   | 329,193                            |  |  |   | 570,449    |   | 
| |      |  |                    |            |                |   |                                    |  |  |   |            |   | 
| |      |  |                    | 39,657,458 |                | $ | 4,763,370                          |  |  | $ | 25,674,221 |   | 
| |      |  |                    |            |                |   |                                    |  |  |   |            |   | 

The
following represents shares issued upon exercise of stock options:

| |      |  |                     |         |                |   |                                    |  |  |   |         |  | 
| | ---- |  | ------------------- | ------- | -------------- | - | ---------------------------------- |  |  | - | ------- |  | 
| | Year |  | Number
  of  Shares |         | Common
  Stock |   | Capital in
  Excess
  of Par Value |  | 
| |      |  |                     |         |                |   |                                    |  | 
| | 1955 |  |                     | 73,000  |                | $ | 7,300                              |  |  | $ | 175,200 |  | 
| | 1978 |  |                     | 7,000   |                |   | 840                                |  |  |   | 6,160   |  | 
| | 1979 |  |                     | 213,570 |                |   | 25,628                             |  |  |   | 265,619 |  | 
| | 1980 |  |                     | 76,830  |                |   | 9,219                              |  |  |   | 125,233 |  | 
| | 1981 |  |                     | 139,600 |                |   | 16,752                             |  |  |   | 227,548 |  | 
| | 1996 |  |                     | 10,000  |                |   | 1,200                              |  |  |   | 12,300  |  | 
| | 1997 |  |                     | 10,000  |                |   | 1,200                              |  |  |   | 10,050  |  | 
| |      |  |                     |         |                |   |                                    |  |  |   |         |  | 
| |      |  |                     | 530,000 |                | $ | 62,139                             |  |  | $ | 822,110 |  | 
| |      |  |                     |         |                |   |                                    |  |  |   |         |  | 

Coastal
Caribbean has reserved 7,800,000 shares which may be issued in exchange for
Coastal Petroleum shares, as described in Note 2.

48

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COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

6.         Stock
Option Plan

The
Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB No. 25) and related
Interpretations in accounting for its stock options because the alternative
fair value accounting provided under FASB Statement No. 123, Accounting for
Stock Based Compensation, requires use of option valuation models that were
not developed for use in valuing stock options. Under APB No. 25, because the
exercise price of the Companys stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

During
1995, the Company adopted a Stock Option Plan covering 1,000,000 shares of the
Companys common stock. The following table summarizes stock option activity:

|                                                            |  |                    |  |                      |   |  |  |  |              |  |  | 
|----------------------------------------------------------- |  | ------------------ |  | -------------------- | - |  |  |  | ------------ |  |  | 
|Options outstanding                                         |  | Number of
  Shares |  | Exercise
  Price ($) |  
|                                                            |  |                    |  |                      |   | 
|Outstanding and exercisable at
  December 31, 2002          |  |                    |  | 925,000              |   |  |  |  | .91
  2.625 |  | 
|Expired                                                     |  |                    |  | (225,000             | ) |  |  |  | 1.13-2.625   |  | 
|                                                            |  |                    |  |                      |   |  |  |  |              |  | 
|Outstanding and exercisable at
  December 31, 2003 and 2004 |  |                    |  | 700,000              |   |  |  |  | .91          |  | 
|                                                            |  |                    |  |                      |   |  |  |  |              |  | 
|                                                           
|Available for
  grant at December 31, 2004                  |  |                    |  | 75,000               |   |  |  |  |              |  | 
|                                                            |  |                    |  |                      |   |  |  |  |              |  | 



|                                                     
|-----------------------------------------------------
|Summary of
  Options Outstanding at December 31, 2004



|             |  |                    |         |                 |  |                     |  |  |     |  | 
|------------ |  | ------------------ | ------- | --------------- |  | ------------------- |  |  | --- |  | 
|Year Granted |  | Number of
  Shares |         | Expiration Date |  | Exercise Prices ($) | 
|             |  |                    |         |                 |  |                     |  | 
|            
|Granted 2000 |  |                    | 700,000 |                 |  | Mar.
  22, 2010     |  |  | .91 | 

49

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

7.         Income
taxes

Bermuda
currently imposes no taxes on corporate income or capital gains outside of
Bermuda.  The Companys subsidiary,
Coastal Petroleum, has U.S. net operating loss carry forwards for federal and
state income tax purposes, which may be used to reduce its taxable income, if
any, during future years which aggregated approximately $10,700,000 at December
31, 2004 ($11,400,000 at December 31, 2003) and expire in varying amounts from
2004 through 2024 as follows: $550,000 in 2005, $418,000 in 2006, $549,000 in
2007, $480,000 in 2009, $571,000 in 2010, $955,000 in 2011, $1,281,000  in 2012, $757,000 in 2018, $622,000 in 2019,
$749,000 in 2020, $1,884,000 in 2021, $1,693,000 in 2022, $132,000 in 2023 and
$51,000 in 2024.  For financial
reporting purposes, a valuation allowance has been recognized to offset the
deferred tax assets relating to those carry forwards.  Significant components of the Companys deferred tax assets were
as follows:

|                                   |  |      |            |      |   |            |  
|---------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                   |  | 2004 |            | 2003 |  
|                                   |  |      |            |      |  
|Net operating losses               |  | $    | 4,024,000  |      | $ | 4,284,000  |  
|Accruals to related parties        |  |      | 268,000    |      |   | 123,000    |  
|Write off of unproved
  properties |  |      | 1,831,000  |      |   | 1,831,000  |  
|                                   |  |      |            |      |   |            |  
|Total deferred tax assets          |  |      | 6,123,000  |      |   | 6,238,000  |  
|Valuation allowance                |  |      | (6,123,000 | )    |   | (6,238,000 | )
|                                   |  |      |            |      |   |            |  
|Net deferred tax assets            |  | $    | -          |      | $ | -          |  
|                                   |  |      |            |      |   |            |  

8.        Related
party transactions:

Loans

During
2004 and 2003, Robert Angerer Sr. and Phillip Ware loaned the Company a total
of $89,000 and $17,000 and were owed $106,000 and $17,000 at December 31, 2004
and 2003, respectively.

Legal
Services

The
Company was billed annually $288,000, in fees by Angerer & Angerer during
2004, 2003, and 2002. Robert Angerer, Sr. was elected a director of Coastal
Caribbean and of Coastal Petroleum on January 30, 2003 and a Vice President of
Coastal Caribbean and Coastal Petroleum on February 28, 2003. At December 31,
2004, fees of $129,000, $268,000 and $597,000 remain unpaid to G&OD, Murtha
Cullina LLP and Angerer & Angerer, respectively.

50

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

8.       Related
party transactions (Cont.)

The
Company was billed approximately $43,500, and $232,000 in fees by the law firm of
Murtha Cullina LLP during 2003, and 2002, respectively. There were no fees
billed in 2004. Mr. Timothy L. Largay, a partner of the firm of Murtha Cullina
LLP, was a director and Vice President of the Company from January 15, 2001
until his resignation on October 7, 2002.

Accounting
& Administrative Services

G&OD
INC provided accounting and administrative services, office facilities and
support staff to the Company until December 2002.  G&OD INC is owned by Mr. James R. Joyce, who was the
Treasurer and Assistant Secretary, until his retirement in December 2002.  During 2002, G&OD billed fees of
$178,000.  Subsequent to this time, Mr.
Daniel Sharp provided accounting and administrative services to the Company
until June 24, 2003. Effective June 24, 2003, Mr. Daniel W. Sharp
resigned as Treasurer, Chief Financial Officer, Chief Accounting Officer and
Assistant Secretary of the Company. Kenneth Michael Cornell of Cornell &
Associates, Inc. is the Chief Financial Officer of the Company.  During 2003 Mr. Sharp and Mr. Cornell billed
fees of $34,000 and $16,000, respectively. 
During 2004, Mr. Cornell billed fees of $18,000.

Amounts
Due to Related Parties

The
Company had the following balances due at December 31:

|                       |  |      |           |      |  |           | 
|---------------------- |  | ---- | --------- | ---- |  | --------- | 
|                       |  | 2004 |           | 2003 | 
|                       |  |      |           |      | 
|                       |  |      |           |      |  |           | 
|G&OD                  |  |      | 129,000   |      |  | 129,000   | 
|Murtha Cullina         |  |      | 268,000   |      |  | 268,000   | 
|Angerer & Angerer      |  |      | 597,000   |      |  | 315,000   | 
|Officer Loans          |  |      | 106,000   |      |  | 17,000    | 
|Other                  |  |      | 494,000   |      |  | 325,000   | 
|                       |  |      |           |      |  |           | 
|Due to Related Parties |  |      | 1,594,000 |      |  | 1,054,000 | 

51

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COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

9.        Selected
quarterly financial data (unaudited)

The
following is a summary (in thousands, except for per share amounts) of the
quarterly results of operations for the years ended December 31, 2004 and 2003:

|                                                |  |       |        |       |  |        |   |       |        |   |  |        |   | 
|----------------------------------------------- |  | ----- | ------ | ----- |  | ------ | - | ----- | ------ | - |  | ------ | - | 
|2004                                            |  | QTR 1 |        | QTR 2 |  | QTR 3  |   | QTR 4 |       
|                                                |  |       |        |       |  |        |   |       |        |  
|                                                |  | ($)   |        | ($)   |  | ($)    |   | ($)   |       
|                                                |  |       |        |       |  |        |   |       |        |  
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Total
  revenues                                |  |       | -      |       |  | -      |   |       | -      |   |  | -      |  
|Expenses                                        |  |       | (192   | )     |  | (171   | ) |       | (152   | ) |  | (158   | )
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Net loss                                        |  |       | (192   | )     |  | (171   | ) |       | (152   | ) |  | (158   | )
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Per share (basic &
  diluted)                   |  |       | (.004  | )     |  | (.004  | ) |       | (.003  | ) |  | (.003  | )
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |   | 
|Weighted average number of
  shares outstanding |  |       | 46,212 |       |  | 46,212 |   |       | 46,212 |   |  | 46,212 |  
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  



|                                                |  |       |        |       |  |        |   |       |        |   |  |        |   | 
|----------------------------------------------- |  | ----- | ------ | ----- |  | ------ | - | ----- | ------ | - |  | ------ | - | 
|2003                                            |  | QTR 1 |        | QTR 2 |  | QTR 3  |   | QTR 4 |       
|                                                |  |       |        |       |  |        |   |       |        |  
|                                                |  | ($)   |        | ($)   |  | ($)    |   | ($)   |       
|                                                |  |       |        |       |  |        |   |       |        |  
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Total
  revenues                                |  |       | -      |       |  | -      |   |       | -      |   |  | -      |  
|Expenses                                        |  |       | (329   | )     |  | (217   | ) |       | (265   | ) |  | (197   | )
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Net loss                                        |  |       | (329   | )     |  | (217   | ) |       | (265   | ) |  | (197   | )
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Per share (basic &
  diluted)                   |  |       | (.005  | )     |  | (.005  | ) |       | (.005  | ) |  | (.005  | )
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  
|Weighted average number of
  shares outstanding |  |       | 46,212 |       |  | 46,212 |   |       | 46,212 |   |  | 46,212 |  
|                                                |  |       |        |       |  |        |   |       |        |   |  |        |  

52

---



COASTAL
CARIBBEAN OILS & MINERALS, LTD.
Notes to Consolidated Financial Statements
December 31, 2004

10.          Subsequent
Events

The
Company and the State of Florida have agreed to a final settlement of all
claims and rights between the parties including the Company, its subsidiary
Coastal Petroleum, and royalty holders that have intervened in Coastal
Petroleums recent litigation and includes the cancellation of all property
lease rights for a lump sum payment by the State of $12.5 million.

The
royalty holders who intervened in the Coastal Petroleum litigation would
receive $2.225 million for their interests, and Lykes Minerals Corp. would
tender its Coastal Petroleum common shares and transfer any interest in the
Leases to Coastal Petroleum for $1.39 million. 
Under the Agreement with the State, the Company will receive and
distribute the following:

|                                                                |  |   |            | 
|--------------------------------------------------------------- |  | - | ---------- | 
|Agreement with the State                                        |  | $ | 12,500,000 | 
|                                                                |  |   |            | 
|To Lykes Mineral Corporation                                    |  |   | 1,390,000  | 
|To Outside Royalty Holders                                      |  |   | 2,225,000  | 
|                                                                |  |   |            | 
|                                                                |  |   |            | 
|To the Company and its Subsidiary                               |  |   | 8,885,000  | 
|                                                                |  |   |            | 
|To Settlement Consultant                                        |  |   | 465,000    | 
|To Company Creditors (as of April 30, 2005)                     |  |   |            | 
|CCO                                                             |  |   | 230,000    | 
|CPC                                                             |  |   | 2,265,000  | 
|                                                                |  |   |            | 
|                                                                |  |   |            | 
|Amount to
  Company and Subsidiary After payment
  to Creditors |  | $ | 5,925,000  | 

The
other shareholders of Coastal Petroleum have agreed to sell their shares back
to Coastal Petroleum for a total of $801,923.03 out of the remaining funds in
the subsidiary.  Coastal Caribbean would
own 100% of Coastal Petroleum Company.

There
would be no contingency fees due as described in Note 4 as the past costs and
fees for the Florida Litigation exceed the amount of funds the Company will
receive under the Agreement.

The
Florida Legislature addressed the funding of this settlement Agreement in its
recent legislative session which began in March of this year.  Upon approval of the Legislative Budget
Commission and the Governor and Cabinet sitting as the Board of Trustees of the
Internal Improvement Trust Fund, the Company expects to receive the funds after
July 1 of this year.  The payment of
funds is contingent upon the exchange of proper releases and other documents
from all parties as set out in the Agreement.

53

---



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
  and Financial Disclosure

Previous
Independent Accountants

On
May 28, 2003, Ernst & Young LLP (Ernst & Young) resigned as Coastal
Caribbean Oils & Minerals, Ltd.s (the Company) independent public
accountants. Ernst & Youngs decision to resign was not recommended or
approved by the Companys Board of Directors or any committee thereof.

Ernst
& Youngs report on the Companys consolidated financial statements for the
Companys fiscal year ended December 31, 2002 did not contain an adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.

During
the fiscal year ended December 31, 2002 and through May 28, 2003, there were no
disagreements with Ernst & Young on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure
which, if not resolved to Ernst & Youngs satisfaction, would have caused
Ernst & Young to make reference to the subject matter in connection with
their report on the Companys consolidated financial statements for such years;
and there were no reportable events as defined in Item 304(a)(1)(v) of the
Regulation S-K.

The
Company provided Ernst & Young with a copy of the foregoing disclosures.

New
Independent Accountants

In
June, 2003 the Company retained James Moore & Co., P.L. as its independent
public accountants.

|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Phillip
W. Ware, the principal executive officer, and Kenneth M. Cornell, the principal
financial officer, have evaluated the Companys disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) adopted under the
Securities Act of 1934) within the ninety (90) day period prior to the date of
this report and have concluded:

| |                                                                                                                                                                                                                                                                                                                                                                             | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | 1.     That the Companys disclosure
  controls and procedures are adequately designed to ensure that material
  information relating to the Company, including its consolidated subsidiary,
  is timely made known to such officers by others within the Company and its
  subsidiary, particularly during the period in which this annual report is
  being prepared; and
| |                                                                                                                                                                                                                                                                                                                                                                             | 
| | 2.     That there were no significant changes in the
  Companys internal controls or in other factors that could significantly
  affect these controls subsequent to the date of our evaluation, including any
  corrective actions with regard to significant deficiencies and material
  weaknesses.                                                                    

54

---

PART III

|         |                                                  
|-------- | -------------------------------------------------
|Item 10. | Directors
  and Executive Officers of the Company

Directors

As
of December 31, 2004, the board of directors included two members, one of whom,
Mr. Ware, also serve as an executive officer. 
The board is divided into two classes, with each class serving a term of
office of three years or until such time as their successors are elected,
qualified, and assume office.  In as
much as no annual meeting of the shareholders has been held since 2001, no
directors have been elected since that time.

|                  |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|----------------- |  | -------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name              |  | Position                         |  | Biographical
   Information                                                                                                                                                                                                                                                                                                                                                     
|                  |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|                  |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|Class
  2002      |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|                  |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|Robert J. Angerer |  | Director
  Vice President        |  | Mr. Robert J. Angerer, Sr. was appointed as a
  director of Coastal Caribbean and Coastal Petroleum on January 30, 2003 to
  fill a vacancy left by the retirement of Benjamin Heath.  He is a principal in the law firm of
  Angerer & Angerer, Tallahassee, Florida. 
  He has been litigation counsel to Coastal Petroleum for more than
  twenty-five years. Age fifty-eight
|                  |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|Phillip W. Ware   |  | Director
  President
  Treasurer |  | Mr. Ware, a geologist, has been President and a
  director of Coastal Petroleum since 1985. 
  Mr. Ware has also been a director of Coastal Caribbean since 1985. Age
  fifty-three.                                                                                                                                                                                            
|Class
  2003      |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|                  |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 
|None              |  |                                  |  |                                                                                                                                                                                                                                                                                                                                                                                 

55

---

Executive
Officers

Philip
W. Ware has been President of Coastal Petroleum and Vice President of Coastal
Caribbean for many years and became President of Coastal Caribbean effective
March 1, 2003, and Robert J. Angerer, became a director of Coastal Caribbean on
January 30, 2003 and Vice President of Coastal Caribbean on February 27, 2003. Effective June 24,
2003, Daniel W. Sharp resigned as Treasurer, Chief Financial Officer, Chief
Accounting Officer and Assistant Secretary of the Company. Kenneth Michael
Cornell of Cornell & Associates, Inc. has become the Chief Financial
Officer and Principal Accounting Officer of the Company, effective June 24,
2003.  Mr. Cornell, age 36, is a Certified Public Accountant who has served businesses
in various financial and accounting capacities during the past seven years.

All
of the officers of Coastal Caribbean are elected annually by the board and
report directly to it.

Only
Mr. Ware received direct compensation for his services as an officer of Coastal
Caribbean or Coastal Petroleum.  $69,000
and $92,000 of Mr. Wares compensation for his services has been deferred
during 2003 and 2004, respectively.  Mr.
Ware devotes 100% of his professional time to the business and affairs of
Coastal Caribbean and Coastal Petroleum. 
The other executive officers devote a small percentage of their
professional time as officers on behalf of the companies.

The
business experience described for each director or executive officer above
covers the past five years.

We
are not aware of any arrangements or understandings between any of the
individuals named above and any other person by which any of the individuals
named above was selected as a director and/or executive officer.  We are not aware of any family relationship
among the officers and directors of Coastal Caribbean or its subsidiary.

Compliance
with Section 16(a) of the Securities Exchange Act of 1934

Section  16(a) of the  Securities 
Exchange  Act of 1934 
requires  the Companys
executive  officers,  directors and persons who beneficially own
more than 10% of the Companys Common Stock to file initial reports of
beneficial ownership and reports of changes in beneficial ownership with the
Securities and Exchange Commission (the SEC). Such  persons are required 
by  the SEC regulations to
furnish the Company with copies of all Section 16(a) forms filed by such
persons. Based solely on its copies of forms received by it, or written
representations from certain reporting 
persons that no Form 5s were required for those persons, the Company
believes that during the just completed fiscal year, its executive officers,
directors, and greater than 10% beneficial owners compiled with all applicable
filing requirements.

56

---

|         |                         
|-------- | ------------------------
|Item 11. | Executive
  Compensation

The
following table sets forth certain summary information concerning the
compensation of the Companys two most highly-paid executive officers (the
Named Executive Officers).  No other
executive officer earned compensation in excess of $100,000 during the year
2004.

|                                                             |                     |                                                                               |                           |                
|------------------------------------------------------------ | ------------------- | ----------------------------------------------------------------------------- | ------------------------- | ---------------
|Summary Compensation Table                                  
|Name andPrincipal Position                                   | Annual Compensation | Long Term 
  Compensation
  AwardSecurities 
  Underlying 
  Options/SARs (#) | All OtherCompensation ($)
|Year                                                         | Salary(1) ($)      
|Benjamin
  W. Heath, President and
  Chief Executive Officer | 20032002            | 6,666
  40,000                                                                | -
              -         | -18,075 (2)    
|Phillip
  W. Ware, Vice President                            | 2004
  2003
  2002  | 92,000
  92,000
  92,000                                                      | --
  100,000              | --
  13,800 (3)

(1)  Mr. Heath was only paid $3,333 of his salary
during 2002, and none in 2003. Mr. Ware was only paid $23,000 of his salary
during 2003 and none in 2004.(2)  Reimbursement for office expenses $12,075 (of which $10,025 has been
deferred), and payments to a SEP-IRA pension plan $6,000 in 2002 (all of which
has been deferred.(3)  Payment to SEP-IRA pension plan (all of which has been deferred in
2002).

Mr.
Sharp was paid an hourly fee for his services to the Company and was paid
$34,000 in fees during 2003.

Mr.
Cornell is paid an hourly fee for his services to the Company and was paid
$16,000 and $18,000 in fees during 2003 and 2004, respectively.

Compensation of Directors

All
of our directors except for directors who are also executive officers are
entitled to receive annual directors fees in the amount of $22,500.  For the year 2003 and 2004, all director
fees have been deferred.

Stock Options

No Stock Options were granted during the
year ended December 31, 2004.  The
following table provides information about unexercised stock options held by
the Named Executive Officers at December 31, 2004:

57

---

|                                                                                 |                                  |                   |                                                                                       |                                                                          |             |               |  |                      |  |  |       |  |  |           |  |  |       | 
|-------------------------------------------------------------------------------- | -------------------------------- | ----------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------- | ------------- |  | -------------------- |  |  | ----- |  |  | --------- |  |  | ----- | 
|Aggregated Option/SAR Exercises in 2004 and December 31,
  2004Option/SAR Values
|                                                                                 | SharesAcquired
  On Exercise (#) | ValueRealized ($) | Number of Securities 
  Underlying Unexercised
  Options/SARs (#)at December 31, 2004 | Value of Unexercised In-The-
  MoneyOptions/SARs 
  at December 31, 2004
|Name                                                                             |                                  |                   | Exercisable                                                                           | Unexercisable                                                            | Exercisable | Unexercisable
|Benjamin W. Heath
  Benjamin W. Heath                                            |                                  | -0-
  -0-         |                                                                                       |                                                                          | -0-
  -0-   |               |  | 100,000
  45,000     |  |  | -
  - |  |  | -0-
  -0- |  |  | -
  - | 
|Phillip W. Ware
  Phillip W. Ware                                                |                                  | -0-
  -0-         |                                                                                       |                                                                          | -0-
  -0-   |               |  | 100,000
   
  72,000 |  |  | -
  - |  |  | -0-
  -0- |  |  | -
  - | 

The Company has not adjusted
or amended the exercise price of any stock options during the year end December
31, 2004.

Compensation Committee
Interlocks and Insider Participation

The
entire board of directors constitutes the compensation committee. Phillip W. Ware
is a director and President of Coastal Caribbean and Coastal Petroleum.

58

---

|         |                                                                 
|-------- | ----------------------------------------------------------------
|Item 12. | Security
  Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners

The
following table provides information as to the number of shares of our stock
owned beneficially at December 31, 2004 by each person who is known to be the
beneficial owner of more than 5% of the outstanding shares of our common stock.

|                                       |  |                                                |   |                               |  |                    |  |  |        | 
|-------------------------------------- |  | ---------------------------------------------- | - | ----------------------------- |  | ------------------ |  |  | ------ | 
|                                       |  | Amount
  and Nature of 
  Beneficial Ownership |   |                               | 
|                                       |  |                                                |   |                               | 
|Name and Address of   Beneficial Owner |  | Shares
  Held 
  Directly                      |   | Shares
  Subject 
  to Option |  | Percent
  of Class | 
|                                       |  |                                                |   |                               |  |                    | 
|                                       |  |                                                |   |                               |  |                    |  |  |        | 
|Lykes Minerals Corp.                   |  |                                                | - |                               |  | 7,800,000*         |  |  | 14.4** | 
|111 East Madison Street                |  |                                                |   |                               |  |                    |  |  |        | 
|P.O. Box 1690                          |  |                                                |   |                               |  |                    |  |  |        | 
|Tampa, FL 
  33601                     |  |                                                |   |                               |  |                    |  |  |        | 



---

|   |                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------
|*  | Lykes Minerals Corp. has purchased a total of 78
  shares of Coastal Petroleum which are convertible into 7,800,000 of our
  shares.
|   |                                                                                                                                     
|** | Assumes all outstanding options held by Lykes
  Mineral Corp are exercised to acquire our shares.                                   

As of February 1, 2003, Mr. Robert J. Angerer, Sr.
owned 2,207,487 shares , or 4.77%, of our common stock and his son, Mr. Robert
J. Angerer, Jr., owned 2,206,914 shares, or 4.76%, of our common stock.  Mr. Angerer, Sr. disclaims beneficial ownership
of any shares owned by his son.

Security Ownership of Management

The following table sets forth information as to
the number of shares of the Companys common stock owned beneficially at March
18, 2005 by each director of the Company and by all directors and executive
officers as a group:

|                                                                     |  |                                                |  |           |  |                  |  |         |  | 
|-------------------------------------------------------------------- |  | ---------------------------------------------- |  | --------- |  | ---------------- |  | ------- |  | 
|                                                                     |  | Amount and Nature of
  Beneficial 
  Ownership | 
|                                                                     |  |                                                | 
|Name of Individual or Group                                          |  | Shares Held Directly or 
  Indirectly          |  | Options   |  | Percent of Class | 
|                                                                     |  |                                                |  |           |  |                  | 
|Phillip W. Ware                                                      |  |                                                |  | 3,791     |  |                  |  | 172,000 |  | 
|Kenneth
  M. Cornell                                                 |  |                                                |  | 0         |  |                  |  | 0       |  | 
|Robert
  J. Angerer, Sr.                                             |  |                                                |  | 2,207,487 |  |                  |  | 0       |  | 
|                                                                     |  |                                                |  |           |  |                  |  |         |  | 
|Directors and executive officers as a group (a
  total of 3 persons) |  |                                                |  | 2,211,278 |  |                  |  | 172,000 |  | 
|                                                                     |  |                                                |  |           |  |                  |  |         |  | 



---

|  |                
|- | ---------------
|* | Less
  than 1%.

59

---

EQUITY
COMPENSATION PLAN INFORMATION

The
following table provides information about the Companys common stock that may
be issued upon the exercise of options and rights under the Companys 1995
Stock Option Plan as of December 31, 2004.

Plan Category
  
  
  Number of Securities
  to be issued upon
  exercise of
  outstanding options,
  warrants and rights(a) (#)
  
  
  Weighted average
  exercise price of 
  outstanding 
  options, warrants 
  and rights(b) ($)
  
  
  Number of securities
  remaining available for
  issuance under equity
  compensation plans
  (excluding securities
  reflected in column (a))(c) (#)Equity
  compensation plans
  approved by security holders
  
  
  
  
  0
  
  
  
  
  
  0
  
  
  
  
  
  0Equity compensation plans not approved by
security holders (1)
  
  
  
  
  700,000
  
  
  
  $
  
  1.33
  
  
  
  
  
  75,000Total:
  
  
  
  
  700,000
  
  
  
  $
  
  1.33
  
  
  
  
  
  75,000


|    |                        
|--- | -----------------------
|(1) | 1995 Stock Option Plan.

The
Companys 1995Stock Option Plan was adopted by the Board
of Directors of the Company in March 1995. 
1,000,000 shares of the Companys common stock were authorized for
issuance under the terms of the plan. 
Options under the plan may be granted only to directors, officers, key
employees of, and consultants and consulting firms to, (i) the Company, (ii)
subsidiary corporations of the Company from time to time and any business
entity in which the Company from time to time has a substantial interest, who,
in the sole opinion of the Committee of the Board administering the Plan, are
responsible for the management and/or growth of all or part of the business of
the Company.  The exercise price of each
option to be granted under the plan shall not be less than the fair market
value of the stock subject to the option on the date of grant of the option.

60

---

|Item 13. | Certain Relationships and Related Transactions
|-------- | ----------------------------------------------

Angerer & Angerer

The
law firm of Angerer & Angerer, Tallahassee, Florida, has been litigation
counsel to Coastal Petroleum for more than twenty-five years.  Mr. Robert J. Angerer, Sr., a member of the
firm, was elected a director of Coastal Caribbean and of Coastal Petroleum on
January 30, 2003, and a Vice President of Coastal Caribbean and Coastal
Petroleum on February 28, 2003.  During
2004, Angerer & Angerer billed Coastal Petroleum $288,000 for legal
fees.  At December 31, 2004, fees
owed by Coastal Petroleum to Angerer & Angerer of $597,000 remain unpaid.

Robert
J. Angerer, Sr.

Mr.
Robert J. Angerer, Sr., a director and Vice President of both Coastal Caribbean
and Coastal Petroleum, has loaned the companies funds in the total amount of
$106,000 to enable them to continue operating during 2003 and 2004.

Royalty Interests

The
State of Florida oil, gas and mineral leases held by Coastal Petroleum on
approximately 3,700,000 acres of submerged lands along the Gulf Coast and
certain inland lakes and rivers are subject to certain overriding royalties
aggregating 1/16th as to oil, gas and sulphur, and 13/600ths
as to minerals other than oil, gas and sulphur.  Of the overriding royalties as to oil, gas and sulphur, a 1/90th
overriding royalty, and of the overriding royalties on minerals other than oil,
gas and sulphur, a 1/60th overriding royalty, is held by Johnson
& Company, a Connecticut partnership which is used as a nominee by the
members of the family of the late William F. Buckley.  A trust, in which Mr. Heath has a 54.4%
beneficial interest, has a beneficial interest in such royalty interest held by
Johnson & Company.  No payments have
been made to Johnson & Company (or to the beneficial owners of such royalty
interests) in more than forty years.

In
1990, Coastal Petroleum granted to the following persons the following
percentages of any net recovery from execution on or satisfaction of judgment
or from settlement of the lawsuit against the State of Florida as follows:

61

---

|                  |  |                                 |      |                                
|----------------- |  | ------------------------------- | ---- | -------------------------------
|Name              |  | Percent
  
  of net 
  recovery |      | Coastal
  Petroleum 
  Position
|                  |  |                                 |      |                                
|Benjamin W. Heath |  |                                 | 1.25 |                                
|Phillip W. Ware   |  |                                 | 1.25 |                                
|James R. Joyce    |  |                                 | 0.30 |                                

|     |                                        
|---- | ---------------------------------------
|(*)  | Mr. Heath retired on February 28, 2003.
|(**) | Mr. Joyce retired in December 2002.    

The
costs and fees for the years involved in the Florida litigation exceed the
amount of the funds Coastal Petroleum will receive under the Agreement with the
State.Therefore there is no net recovery and no contingency fees due from the
contingent interests granted as discussed above. See Item 4 Litigation.

62

---

|Item 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

James
Moore & Co., P.L. audited the Companys financial statements for 2004 and
2003. Ernst & Young LLP audited the Companys financial statements for 2002
and performed the review for the quarter ended March 31, 2003.

Fees
related to services performed by James Moore & Co., P.L. and Ernst &
Young LLP in 2004 and 2003 were as follows:

|                   |  |  |        |  |  |        | 
|------------------ |  |  | ------ |  |  | ------ | 
|                   |  |  | 2004   |  |  | 2003   | 
|                   |  |  |        |  |  |        | 
|Audit Fees (1)     |  |  | 22,817 |  |  | 16,500 | 
|Audit-Related Fees |  |  | -0-    |  |  | -0-    | 
|Tax Fees (2)       |  |  | 1,200  |  |  | 750    | 
|Total              |  |  | 24,017 |  |  | 17,250 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit
  fees represent fees for professional services provided in connection with the
  audit of our financial statements and review of our quarterly financial
  statements.  The Audit Committee must
  preapprove audit related and non-audit services not prohibited by law to be
  performed by the Companies independent auditors.  The Audit Committee for the Company was made up of John D.
  Monroe and Graham B. Collis.  The
  Audit Committee preapproved all audit related and non-audit services in 2004
  and 2003.
|(2) | Tax
  fees principally included tax advice, tax planning and tax return
  preparation.                                                                                                                                                                                                                                                                                                                                                                                                                                             

63

---

PART IV

|                                                                                                            |                                             
|----------------------------------------------------------------------------------------------------------- | --------------------------------------------
|Item 15.                                                                                                    | Exhibits
  and Financial Statement Schedules
|                                                                                                            |                                             
|(a)                                                                                                         | (1)       Financial Statements.             
|                                                                                                            |                                             
|The
  financial statements listed below and included under Item 8 above are filed
  as part of this report.

|                                                                                                                                                                                       |      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----
|                                                                                                                                                                                       | Page 
|                                                                                                                                                                                       |      
|                                                                                                                                                                                       |      
|Reports of Independent Registered Public Accounting Firms                                                                                                                              | 32   
|                                                                                                                                                                                       |      
|Consolidated balance sheets at December 31, 2004 and
  2003                                                                                                                            | 34   
|                                                                                                                                                                                       |      
|Consolidated statements of operations for each of
  the three years in the period ended December 31, 2004 and for the period from
  January 31, 1953 (inception) to December 31, 2004. | 35   
|                                                                                                                                                                                       |      
|Consolidated statements of cash flows for each of
  the three years in the period ended December 31, 2004 and for the period from
  January 31, 1953 (inception) to December 31, 2004. | 36   
|                                                                                                                                                                                       |      
|Consolidated statement of common stock
  and capital in excess of par value for the period from January 31, 1953
  (inception) to December 31, 2004                                    | 37   
|                                                                                                                                                                                       |      
|Notes to consolidated financial statements.                                                                                                                                            | 38-53

|                                                                                                                                                                                                                                                                                  |                                                           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------
|                                                                                                                                                                                                                                                                                  | (2)      Financial Statement Schedules.                   
|                                                                                                                                                                                                                                                                                  |                                                           
|All
  schedules have been omitted since the required information is not present or
  not present in amounts sufficient to require submission of the schedule, or
  because the information required is included in the consolidated financial
  statements and the notes thereto.
|                                                                                                                                                                                                                                                                                  |                                                           
|(b)                                                                                                                                                                                                                                                                               | Exhibits.                                                 
|                                                                                                                                                                                                                                                                                  |                                                           
|                                                                                                                                                                                                                                                                                  | The following exhibits are filed as part of this
  report:

Item Number

|   |                                                                              
|-- | -----------------------------------------------------------------------------
|2. | Plan of acquisition, reorganization, arrangement,
  liquidation or succession
|   |                                                                              
|   | Not applicable.                                                              

64

---



|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.  | Articles of incorporation and By-Laws.                                      
|    |                                                                             
|    | (a)                                                                          | Memorandum of Association as amended on June 30,
  1982, May 14, 1985 and April 7, 1988 filed as Exhibit 3. (a) to Report
  on Form 10-K for the year ended December 31, 1998 (File Number 001-04668) is
  incorporated herein by reference.                                                                                      
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | (b)                                                                          | Bye-laws are incorporated by reference to Schedule
  14(a) Proxy Statement filed on May 13, 1997 (File Number 001-04668).                                                                                                                                                                                                         
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|4.  | Instruments defining the rights of security holders, including
  indentures.
|    |                                                                             
|    | Not applicable.                                                             
|    |                                                                             
|9.  | Voting trust agreement.                                                     
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | Not applicable.                                                             
|    |                                                                             
|10. | Material contracts.                                                         
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | (a)                                                                          | Drilling Lease No. 224-A, as modified, between the
  Trustees of the Internal Improvement Fund of the State of Florida and Coastal
  Petroleum Company dated February 27, 1947 filed as Exhibit 10(a) to Report on
  Form 10-K for the year ended December 31, 1998 (File Number 001-04668) is
  incorporated herein by reference.
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | (b)                                                                          | Drilling Lease No. 224-B, as modified, between the
  Trustees of the Internal Improvement Fund of the State of Florida and Coastal
  Petroleum Company dated February 27, 1947 filed as Exhibit 10(b) to Report on
  Form 10-K for the year ended December 31, 1998 (File Number 001-04668) is
  incorporated herein be reference.
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | (c)                                                                          | Drilling Lease No. 248, as modified, between the
  Trustees of the Internal Improvement Fund of the State of Florida and Coastal
  Petroleum Company dated February 27, 1947 filed as Exhibit 10(c) to Report on
  Form 10-K for the year ended December 31, 1998 (File Number 001-04668) is
  incorporated herein by reference.  
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | (d)                                                                          | Memorandum of Settlement dated January 6, 1976
  between Coastal Petroleum Company and the State of Florida filed as Exhibit
  10(d) to Report on Form 10-K for the year ended December 31, 1998 (File
  Number 001-04668) is incorporated herein by reference.                                                                   
|    |                                                                              |                                                                                                                                                                                                                                                                                                                                   
|    | (e)                                                                          | Agreement between the Company and Coastal Petroleum
  dated December 3, 1991 filed as Exhibit 10(e) to Report on Form 10-K for the
  year ended December 31, 1998 (File Number 001-04668) is incorporated herein
  by reference                                                                                                   

65

---



|     |                                                                                                            |                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | (f)                                                                                                        | Agreement between Lykes Minerals Corp. and Coastal
  Caribbean and Coastal Petroleum dated October 16, 1992 filed as Exhibit 10(f)
  to Report on Form 10-K for the year ended December 31, 1998 (File Number
  001-04668) is incorporated herein by reference.
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | (g)                                                                                                        | Stock Option Plan adopted March 7, 1995 filed as
  Exhibit 4A to form S-8 dated July 28, 1995 (File Number 001-04668) is
  incorporated herein by reference.                                                                                                   
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | (h)                                                                                                        | Memorandum of Settlement dated June 1, 2005 between
  Coastal Petroleum Company, et al. and the State of Florida.                                                                                                                                              
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|11.  | Statement re: computation of per share earnings.                                                          
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | None.                                                                                                     
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|12.  | Statement re: computation of ratios.                                                                      
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | Not applicable.                                                                                           
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|13.  | Annual report to security holders,
  Form 10-Q or quarterly report to security holders.                   
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | Not applicable.                                                                                           
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|16.  | Letter re: change in certifying accountant.                                                               
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | Not applicable.                                                                                           
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|18.  | Letter re: change in accounting principles.                                                               
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | Not applicable.                                                                                           
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|21.  | Subsidiaries of the registrant.                                                                           
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | The Company has one subsidiary, Coastal Petroleum
  Company, a Florida corporation which is 58.45 % owned.
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|22.  | Published report regarding matters submitted to vote
  of security holders.                               
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|     | Not applicable.                                                                                           
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|23.  | Consent of experts and counsel.                                                                           
|23.1 | Consent of Ernst & Young LLP.                                                                             
|23.2 | Consent of James, Moore & Co., P.L.                                                                       
|     |                                                                                                            |                                                                                                                                                                                                                                                                
|24.  | Power of attorney.                                                                                        

66

---



|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Not applicable.                                                                                                                                          
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|31.1 | Certification of Chief Executive Officer Required by
  Rule 13a-14(a)-15d-14(a) under the Exchange Act                                                   
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|31.2 | Certification of Chief Accounting and Financial
  Officer Required by Rule 13a-14(a)-15d-14(a) under the Exchange Act                                    
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|32.1 | Certification pursuant to 18 U.S.C. Section 1350, as
  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed by
  Phillip W. Ware   
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|32.2 | Certification pursuant to 18 U.S.C. Section 1350, as
  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed by
  Kenneth M. Cornell
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|99.  | Additional exhibits.                                                                                                                                     
|     |                                                                                                                                                          
|     | 99.1                                                                                                                                                      | The decision Coastal Petroleum Company v. Florida
  Wildlife Federation et. al. of the First District Court of Appeal dated
  October 6, 1999 (St. George Island permit application case), is incorporated
  by reference to Exhibit 99(a) to the Companys Current Report on Form 8-K
  filed on October 7, 1999 (File Number 001-04668).                                                                
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|     | 99.2                                                                                                                                                      | Complaint, filed January 16, 2001 in the Leon County
  Circuit Court, Coastal Petroleum Company, Plaintiff vs. State of Florida,
  Department of Environmental Protection, and Board of Trustees of the Internal
  Improvement Fund, Defendants, is incorporated by reference to Exhibit 99(a) to
  the Companys Current Report on Form 8-K filed on January 18, 2001 (File
  Number 001-04668).         
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|     | 99.3                                                                                                                                                      | The final judgment in the Leon County Circuit Court,
  Coastal Petroleum Company, Plaintiff vs. State of Florida, Department of
  Environmental Protection, and Board of Trustees of the Internal Improvement
  Fund, Defendants, dated November 15, 2002 is incorporated by reference to
  Exhibit 99.1 to the Companys Current Report on Form 8-K filed on November
  18, 2002 (File Number 001-04668).
|     |                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                           
|     | 99.4                                                                                                                                                      | The Appellant Decision of the First District Court
  of Appeal, Coastal Petroleum Company, Appellant vs. State of Florida,
  Department of Environmental Protection, and Board of Trustees of the Internal
  Improvement Fund, Appellees, dated December 3, 2003.                                                                                                                                         

67

---



SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

| |                                           |                                                          |  | 
| | ----------------------------------------- | -------------------------------------------------------- |  | 
| | COASTAL CARIBBEAN OILS
  & MINERALS, LTD.
| | (Registrant)                             
| |                                          
| | By                                        | /s/ Phillip W. Ware                                     
| |                                           |                                                          | 
| |                                           | Phillip W. Ware, President and
  Chief Executive Officer

|       |              |  |  | 
|------ | ------------ |  |  | 
|Dated: | June 2, 2005 |  |  | 
|       |              |  |  | 

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the date indicated.

|       |                                    |    |                             |              | 
|------ | ---------------------------------- | -- | --------------------------- | ------------ | 
|By     | /s/ Phillip W. Ware                | By | /s/ Kenneth M. Cornell     
|       |                                    |    |                             |              | 
|       | Phillip
  W. Ware                  |    | Kenneth
  M. Cornell       
|       | President, Treasurer, Director and |    | Chief Financial Officer and
|       | Chief Executive Officer            |    | Chief Accounting 
  Officer
|       |                                    |    |                            
|Dated: | June 2, 2005                       |    | Dated:                      | June 2, 2005 | 
|       |                                    |    |                             |              | 
|       |                                    |    |                            
|By     | /s/ Robert J. Angerer              |    |                            
|       |                                    |    |                             |             
|       | Robert J. Angerer                  |    |                            
|       | Director                           |    |                            
|       |                                    |    |                            
|Dated: | June 2, 2005                      
|       |                                    |    |                             |              | 

68

---



INDEX TO EXHIBITS

|            |  |                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                       
|            |  |                                                                                                                       
|10.(h)      |  | Memorandum of Agreement by and between Coastal
  Petroleum Company, et al and the State of Florida Dated June 1, 2005.
|            |  |                                                                                                                       
|23.1        |  | Consent of Ernst & Young LLP                                                                                          
|            |  |                                                                                                                       
|23.2        |  | Consent of James Moore & Co., P.L.                                                                                    
|            |  |                                                                                                                       
|31.1        |  | Certification pursuant to Rule 13a-14 by Phillip W.
  Ware                                                            
|            |  |                                                                                                                       
|31.2        |  | Certification pursuant to Rule 13a-14 by Kenneth M.
  Cornell                                                         
|            |  |                                                                                                                       
|32.1        |  | Certification pursuant to Section 906 by Phillip W.
  Ware                                                            
|            |  |                                                                                                                       
|32.2        |  | Certification pursuant to Section 906 by Kenneth M.
  Cornell                                                         

---